Two sales in the same subdivision are identical except that one has a swimming pool. They sold in the same month for $362,000 (with pool) and $347,000 (without). What does this pair indicate for the pool?
Correct Answer
C) $15,000
In paired sales analysis, properties identical except for the characteristic being measured are compared, and the adjustment is the difference in their prices: $362,000 − $347,000 = $15,000. A single pair should be confirmed with other data before relying on it.
Why This Is the Correct Answer
Option C is correct because the paired sales differ only by the pool and sold in the same month, so the adjustment is the price difference: $362,000 − $347,000 = $15,000. This is the indicated contribution of the pool from this pair. A single pair should be confirmed with other data before relying on it.
Why the Other Options Are Wrong
Option A: $362,000
Option A, $362,000, is wrong because it reports the sale price of the house with the pool rather than the difference between the two sales. The pool's indicated contribution is $362,000 − $347,000 = $15,000.
Option B: $7,500
Option B, $7,500, is wrong because it halves the price difference: ($362,000 − $347,000) ÷ 2 = $7,500. Paired sales analysis uses the full difference, $15,000.
Option D: $347,000
Option D, $347,000, is wrong because it reports the sale price of the house without the pool. The pool's indicated contribution is the difference between the two prices, $15,000.
One difference, one subtraction
If two sales differ by only one feature, subtract one price from the other to measure that feature.
How to use: Use this when a question gives two nearly identical sales and asks for the value of one feature.
Exam Tip
In paired sales questions, the answer is the price difference, not either sale price or a fraction of the gap.
Common Mistakes to Avoid
- -Reporting one of the sale prices instead of the difference
- -Halving the difference between the paired sales
- -Relying on one pair without confirming it with other data
Concept Deep Dive
Analysis
This question tests the basic paired sales technique. When two sales are identical except for one feature, the difference in their prices indicates the market's reaction to that feature. Here the only difference is the pool, so the price gap measures the pool's contribution.
Background Knowledge
Paired sales analysis compares sales that are alike except for the element being measured, so the price difference can be attributed to that element. When sales differ in more than one way, other differences must be adjusted first, which makes the result less reliable.
Real-World Application
An appraiser finds two model-match homes in the same subdivision that sold the same month, one with a pool. She uses the price difference as one indication of the pool's contribution and checks it against other pairs in the area.
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?
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Which of these is listed by Fannie Mae as a sales or financing concession?
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Previous Question
The subject property and a comparable sale are both two-story homes with detached two-car garages built at the same time as the houses and in similar condition. A cost service shows the garage would cost $32,000 to build new, and the appraiser estimates it is 25% depreciated. Using cost analysis, what adjustment should be made to the comparable for the garage?
Next Question
Three comparables, adjusted for all elements except size, indicate $152, $148 and $150 per square foot. The subject has 2,000 square feet and the appraiser gives equal weight. What value does the unit-price analysis indicate?