Two otherwise identical sales differ only in that one has a fireplace and sold for $6,500 more. What has the appraiser found?
Correct Answer
B) A paired-data indication of the fireplace's contributory value
Why this is correct: Paired-data analysis compares two otherwise similar sales that differ by only one feature. The price difference is an indication of that feature's contributory value in the market. Why the other choices are wrong: The installed cost is a construction cost, not necessarily its market value. Definitive proof for every fireplace is too absolute; one pair is just an indication. An anomaly to be discarded is incorrect if the sales are truly comparable except for the fireplace. Exam tip: Paired sales give you a market-derived adjustment figure, not a cost figure.
Why This Is the Correct Answer
The price difference between otherwise identical sales is a paired-data indication of what the market paid for the feature, which is its contributory value.
Why the Other Options Are Wrong
Option A: The installed cost of a fireplace
Installed cost is what construction would charge. Contributory value is what buyers actually pay, and the two frequently differ.
Option C: Definitive proof that every fireplace in the market adds exactly $6,500
One pair indicates rather than proves. Additional pairs are needed before a market-wide figure is supported.
Option D: An anomaly that must be discarded
A clean pair is the most direct evidence available in the sales comparison approach, not an anomaly.
What Buyers Paid, Not What It Cost
What Buyers Paid, Not What It Cost. Contribution and cost are two different numbers.
How to use: Seek two or three more pairs. Consistency across them is what converts an indication into support.
Exam Tip
Check the pair for uncontrolled differences before relying on it. A second unnoticed difference contaminates the whole indication.
Common Mistakes to Avoid
- -Treating a single pair as conclusive
- -Equating contributory value with installed cost
- -Failing to check for a second uncontrolled difference
Concept Deep Dive
Analysis
Paired data analysis isolates a single variable: two sales alike in every respect except one, with the price difference attributed to that difference. Here the appraiser has one such indication, and it points to a fireplace contributing about $6,500 in this market at this time. What matters is being precise about what has and has not been established. This is a market indication of contributory value — what buyers paid for the feature — which is not the same as installed cost, and cost and contribution diverge routinely in both directions. It is also one observation, so it indicates rather than proves; a single pair can reflect negotiation, timing or an uncontrolled difference the appraiser did not detect. Additional pairs strengthen the conclusion, and consistency across them is what turns an indication into support. Nor is a clean pair an anomaly to discard — it is the most direct evidence the sales comparison approach offers.
Background Knowledge
Paired data analysis derives adjustments by comparing sales differing in a single characteristic. The result indicates contributory value, which differs from cost, and is strengthened by consistency across multiple pairs.
Real-World Application
An appraiser finds three pairs indicating $6,000, $6,500 and $7,000 for a fireplace, and concludes a $6,500 adjustment supported by the cluster.
More sales-comparison-approach Questions
Excess land differs from surplus land in that excess land:
A subject property has a 3-car attached garage. The appraiser locates two valid paired sales: Sale 1 (with 3-car garage) sold for $512,000; Sale 2 (with 2-car garage) sold for $497,600. Both properties are otherwise identical — same age, quality, GLA, lot size, and neighborhood — and sold 5 days apart in a balanced market. The appraiser also confirms via public records and listing photos that no other functional or physical differences exist. What is the indicated contributory value of the *third* garage stall?
The most appropriate unit of comparison is determined by:
An appraiser analyzes three paired sales to isolate the effect of a fireplace. In Pair 1, the property with a fireplace sold for $12,000 more; in Pair 2, $10,500 more; and in Pair 3, $13,500 more. All pairs are highly similar and recent. The appraiser selects $12,000 as the final adjustment. Which principle best supports this selection?
A paired sales analysis yields an adjustment of −$15,000 for a property located on a busy arterial street. Later, the appraiser discovers that all three paired properties with arterial exposure also had 20% smaller lots than their non-arterial counterparts — a difference not initially controlled for. What is the most appropriate action per USPAP?
An appraiser identifies two comparable sales that are identical in all respects except that Sale #1 has a finished basement (1,200 sq ft) and sold for $432,000, while Sale #2 has an unfinished basement of the same size and sold for $408,000. Both sales occurred within three weeks of each other in a stable market. The appraiser intends to apply a per-square-foot adjustment for basement finish to the subject property, which has a 1,000 sq ft finished basement. What is the appropriate paired-sales-derived adjustment amount per square foot for a finished basement?
Three sales support $520,000; the borrower's purchase contract is $505,000. May the appraisal conclude above the contract price?
An appraiser develops a $3,200 adjustment for a fireplace based on a single paired sale. The subject has a fireplace; Comparable A does not. The appraiser applies +$3,200 to Comparable A. Later, the appraiser identifies a second pair showing a $4,600 fireplace contribution. The appraiser replaces the original adjustment with $3,900 — the simple average — and applies it to Comparable A. What is the appropriate USPAP-compliant action regarding the adjustment amount?
A comparable sold for $300,000 with the seller carrying a loan 2 points below market, a benefit worth $8,000. What is its cash-equivalent price?
Three comparables adjust to $412,000 (gross adj. 5%), $405,000 (gross adj. 22%), and $410,000 (gross adj. 8%). What is the best-supported value conclusion?
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Previous Question
An appraiser uses a grid to apply adjustments for GLA, condition, and bath count. For GLA, the appraiser applies a $65/sf adjustment. For condition, a −$18,000 dollar adjustment is applied. For baths, a +$9,500 adjustment is used. After all adjustments, the adjusted sale prices range from $412,300 to $428,700. The appraiser then calculates a gross adjustment limit of ±6.5% of the unadjusted sale prices and finds one comparable exceeds it. What is the USPAP-compliant next step?
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Photographs of comparables in a report serve primarily to: