Two verified otherwise-matched cash-equivalent sales are $663,000 at 2550 sqft and $597,000 at 2150 sqft. Consistent area measurement and market controls support applying the extracted marginal rate to a comparable of 2200 sqft sold for $555,000, toward a subject of 2450 sqft. What are the extracted rate, signed comparable adjustment and adjusted price?
Correct Answer
D) $165/sqft; +$41,250; $596,250
Rate=(663000−597000)/(2550−2150)=165 dollars/sqft; comparable adjustment=41250. The subject has 250 more square feet, so add the supported marginal contribution. A total sale-price/area average is not the extracted marginal rate. This is a conditional paired-data indication, not an automatic adjustment from any two differently sized sales.
Why This Is the Correct Answer
Option D is correct because the extracted rate is $66,000 / 400 sq ft = $165 per sq ft, and the subject has 2,450 − 2,200 = 250 more sq ft than the comparable. The comparable is inferior in size, so it receives a +$41,250 adjustment (250 × $165), giving $555,000 + $41,250 = $596,250.
Why the Other Options Are Wrong
Option A: $165/sqft; −$41,250; $513,750
Option A, $165/sqft; −$41,250; $513,750, uses the correct rate but reverses the sign. Subtracting $41,250 from $555,000 gives $513,750, but a smaller comparable must be adjusted upward to $596,250.
Option B: $260/sqft; +$65,000; $620,000
Option B, $260/sqft; +$65,000; $620,000, uses the total price per sq ft of the larger sale ($663,000 / 2,550 = $260) instead of the marginal rate. 250 × $260 = $65,000 and $555,000 + $65,000 = $620,000, but the marginal rate is $165, giving $596,250.
Option C: $165/sqft; +$0; $555,000
Option C, $165/sqft; +$0; $555,000, finds the right rate but makes no adjustment. The 250 sq ft difference with a supported $165 rate calls for +$41,250, giving $596,250.
Difference over difference
Marginal rate equals price difference divided by size difference. Then ask: is the comparable smaller (add) or bigger (subtract) than the subject?
How to use: Use this for any paired-sales size adjustment calculation.
Exam Tip
Watch for a choice that uses total price divided by total area; that average rate is not the marginal rate a paired-sales extraction produces.
Common Mistakes to Avoid
- -Using average price per square foot instead of the marginal rate
- -Subtracting the adjustment when the comparable is smaller than the subject
- -Adjusting the subject instead of the comparable
Concept Deep Dive
Analysis
This question tests extracting a marginal size rate from paired sales and applying it with the correct sign. The rate is the price difference divided by the size difference: ($663,000 − $597,000) / (2,550 − 2,150) = $165 per sq ft. The comparable is 250 sq ft smaller than the subject, so its price is adjusted upward by 250 × $165.
Background Knowledge
The marginal contribution of extra living area is often less than the overall price per square foot, because land and basic components do not scale with size. Paired sales that differ mainly in size can isolate that marginal rate. Adjustments are made to the comparable: an inferior comparable is adjusted up, a superior one down.
Real-World Application
Two nearly identical homes in one subdivision sold at different sizes, and the appraiser extracts a $165 per sq ft marginal rate. A smaller comparable is then adjusted upward by that rate times its size shortfall relative to the subject.
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?
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