Two sales differ by a finished basement and by six months of market movement. To isolate the basement's value the appraiser must:
Correct Answer
C) Remove the market-conditions effect first
Why this is correct: In paired sales analysis, when two sales differ by both a feature and time, you must first isolate the effect of market conditions (time) using a supported time adjustment. The remaining price difference can then be attributed to the feature (the basement). Why the other choices are wrong: 'Divide the price difference in half' is an arbitrary, unsupported method. 'Assume the market was flat over six months' is an assumption not based on evidence. 'Discard the pair as unusable entirely' is unnecessary; proper adjustment can make the pair usable. Exam tip: Untangle paired data: adjust for time first, then attribute the residual to the feature.
Why This Is the Correct Answer
Why this is correct: In paired sales analysis, when two sales differ by both a feature and time, you must first isolate the effect of market conditions (time) using a supported time adjustment. The remaining price difference can then be attributed to the feature (the basement). Why the other choices are wrong: 'Divide the price difference in half' is an arbitrary, unsupported method. 'Assume the market was flat over six months' is an assumption not based on evidence. 'Discard the pair as unusable entirely' is unnecessary; proper adjustment can make the pair usable. Exam tip: Untangle paired data: adjust for time first, then attribute the residual to the feature.
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