Two physically similar homes sell three weeks apart for $372,000 and $360,000. The first has a corner lot, the second an interior lot. Financing, concessions and market movement have not been verified. Before treating their $12,000 difference as a corner-lot adjustment, what is needed?
Correct Answer
C) Verify transaction terms and control other material influences, including time
A difference in observed prices is not isolated feature evidence until other material influences are accounted for. Verify market movement, financing, concessions and relevant property differences before treating the $12,000 gap as a corner-lot effect. If adequately matched and applicable, an inferior interior-lot comparable can be adjusted upward to a corner-lot subject. There is no universal 10-day limit for paired sales.
Why This Is the Correct Answer
Option C is correct because the observed difference of $372,000 − $360,000 = $12,000 cannot be attributed to the corner lot until transaction terms, time and other material influences are verified and controlled. Comparable data includes the date of sale, terms of financing and conditions of sale as well as physical characteristics. Only after those are accounted for can the pair support a corner-lot adjustment.
Why the Other Options Are Wrong
Option A: Assume corner sites command exactly that $12,000 premium in this market
Option A assumes corner sites command exactly that $12,000 premium in this market. That treats an unverified price gap as isolated feature evidence when financing, concessions and time may explain some or all of it.
Option B: Reverse the adjustment direction because the subject has a corner lot
Option B reverses the adjustment direction because the subject has a corner lot. If properly supported, an inferior interior-lot comparable would be adjusted upward toward a corner-lot subject, so reversing the direction is not the issue; verification is.
Option D: Exclude both sales under a 10-day paired-sale limit for matched pairs
Option D excludes both sales under a 10-day paired-sale limit. There is no universal 10-day limit for paired sales; what matters is whether time and other influences are verified and controlled.
Isolate before you attribute
A pair measures one feature only after the other material differences are ruled out.
How to use: Use this before turning any two-sale price gap into an adjustment.
Exam Tip
Choose answers that verify transaction terms and time before treating a price difference as a feature contribution.
Common Mistakes to Avoid
- -Treating a raw price difference between two sales as a feature value
- -Ignoring financing and concessions when pairing sales
- -Applying an arbitrary time window rule to paired sales
Concept Deep Dive
Analysis
This question tests whether a price difference between two sales can be treated as a feature adjustment. A valid pair must isolate the feature by controlling transaction terms, time and other material differences. Here financing, concessions and market movement are unverified, so the $12,000 gap is not yet isolated evidence.
Background Knowledge
Paired sales analysis isolates the value of one feature by comparing sales that are similar in all other material respects. Elements of comparison include property rights, financing, conditions of sale, market conditions, location and physical features. Uncontrolled differences in any of these can contaminate the measured difference.
Real-World Application
An appraiser notices a corner-lot home sold for $12,000 more than an interior-lot twin. Calling the agents, she learns the interior sale included a seller credit and closed in a softer month. She adjusts for those factors before deciding how much of the gap reflects the corner location.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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Previous Question
A two-bedroom condominium unit in a 1990s complex is the subject of an appraisal. An analysis of 1,240 one-unit sales of all types in the county over the past 12 months shows values rising 0.5% per month. Over the same period, 31 sales of units in the subject's complex and two nearby complexes, which buyers treat as interchangeable and which seldom compete with detached homes, show values rising 0.1% per month. Comparable 2, a unit in one of those complexes, went under contract at $250,000 six months before the effective date. What time adjustment applies to Comparable 2, at a simple rate?
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A statistically derived adjustment should still be tested against: