Two comparables are identical except for size. One contains 2,000 square feet and sold for $290,000; the other contains 2,200 square feet and sold for $305,000. What rate per square foot does this pair indicate for a difference in gross living area?
Correct Answer
C) $75.00
Why this is correct: a paired sale isolates what the market paid for the difference, not for the whole house. Calculation: ($305,000 - $290,000) ÷ (2,200 - 2,000) = $15,000 ÷ 200 = $75.00. Why the other choices are wrong: $145.00 and $138.64 are the two properties’ overall prices per square foot, which include the land and everything else the houses share, and using either roughly doubles every size adjustment; $7.50 divides the price difference by the whole area rather than by the difference in area.
Why This Is the Correct Answer
Why this is correct: a paired sale isolates what the market paid for the difference, not for the whole house. Calculation: ($305,000 - $290,000) ÷ (2,200 - 2,000) = $15,000 ÷ 200 = $75.00. Why the other choices are wrong: $145.00 and $138.64 are the two properties’ overall prices per square foot, which include the land and everything else the houses share, and using either roughly doubles every size adjustment; $7.50 divides the price difference by the whole area rather than by the difference in area.
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