An appraiser has the net and gross adjustment percentages for three comparable sales, but no other information about their comparability or the support for the adjustments. What can be concluded about which sale is most reliable?
Correct Answer
D) The percentages alone are insufficient to choose the most reliable indication.
Net and gross percentages alone do not determine the most reliable comparable. Evaluate actual relevance, verification and adjustment support. A small net amount can hide opposing changes, but a smaller gross amount also does not automatically establish superiority.
Why This Is the Correct Answer
Option D is correct because the percentages alone are not enough to choose the most reliable indication. Fannie Mae states that the number or amount of dollar adjustments must not be the sole determinant of a comparable's acceptability. The appraiser must also weigh relevance, verification and adjustment support.
Why the Other Options Are Wrong
Option A: All three are equally reliable whenever the net adjustment is under 10% of the price.
Option A is wrong because a net adjustment under 10% does not make all three sales equally reliable. A small net figure can hide large offsetting adjustments, and reliability depends on more than one percentage.
Option B: The middle gross percentage identifies the most reliable sale.
Option B is wrong because the middle gross percentage has no special meaning for reliability. Picking the middle value does not show which sale is most relevant or best supported.
Option C: The smallest absolute net percentage identifies the most reliable sale.
Option C is wrong because the smallest absolute net percentage can hide large offsetting adjustments. Net size alone does not identify the most reliable sale.
Numbers Screen, Analysis Decides
Net and gross percentages help screen comparables, but analysis of relevance and support decides which is most reliable.
How to use: Use this phrase when a question asks you to rank comparables from percentages alone.
Exam Tip
Be cautious with answers that pick a best comparable from a single statistic; questions that give only percentages often point to the need for more analysis.
Common Mistakes to Avoid
- -Choosing the comparable with the smallest net adjustment without further review
- -Treating a percentage threshold as proof of reliability
- -Ignoring the quality of support behind each adjustment
Concept Deep Dive
Analysis
This question tests whether net and gross adjustment percentages alone can identify the most reliable comparable. They cannot, because reliability depends on relevance, verification and the support behind the adjustments. Percentages are one signal, not a final ranking.
Background Knowledge
Net adjustment is the sum of positive and negative adjustments; gross adjustment is the sum of their absolute values. Both are useful screening tools, but neither one decides reliability. Appraisers consider similarity, data quality and how well adjustments are supported.
Real-World Application
An appraiser has three comparables with different net and gross adjustment totals. The one with the smallest net adjustment has large offsetting adjustments for site and condition. She weighs relevance and the support for each adjustment before deciding which sale to emphasize.
More Sales Comparison Questions
Which stated cause of supported value loss is external?
Improvement cost new is $450,000. Separately supported improvement depreciation deductions of $45,000, $25,000, $15,000 are expressly nonoverlapping and not already excluded from cost new. Add supported site value of $125,000, already reflecting any site losses. What total indicated value results?
Which two depreciation categories may each be classified as curable or incurable by comparing the cost to remedy a deficiency with the value gained?
Improvement cost new is $800,000. Separately supported improvement depreciation deductions of $120,000, $80,000, $40,000 are expressly nonoverlapping and not already excluded from cost new. No site is included. What depreciated improvement amount results?
The principle of anticipation in real estate valuation states that:
Which highest-and-best-use criterion addresses whether a proposed use is allowed by zoning and applicable legal restrictions?
Three comparables produce adjusted indications of $312,000, $309,000 and $315,000, requiring gross adjustments of 9%, 14% and 22% respectively. Verification also establishes that the first sale is the closest competitive substitute and its adjustments are better supported than the other two. Which indication deserves the most weight on those facts?
When reconciling value indications from the three approaches to value, an appraiser should:
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In reconciliation, an appraiser should:
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