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.
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