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?
Correct Answer
C) $256,200
The comparable is 300 sf larger: 300 × $36 = $10,800 deducted, plus $10,000 deducted for non-market financing: $277,000 − $20,800 = $256,200. Omitting the financing adjustment gives $266,200; adding the GLA difference instead gives $287,800.
Why This Is the Correct Answer
Option C is correct because the comparable is 3,100 − 2,800 = 300 sf larger, so the GLA adjustment is 300 × $36 = −$10,800. The non-market financing adjustment is −$10,000. Adjusted price = $277,000 − $10,800 − $10,000 = $256,200.
Why the Other Options Are Wrong
Option A: $266,200
Option A, $266,200, omits the financing adjustment: $277,000 − $10,800 = $266,200. Deducting the $10,000 non-market financing adjustment as well gives $256,200.
Option B: $287,800
Option B, $287,800, adds the GLA difference instead of subtracting it and ignores financing: $277,000 + $10,800 = $287,800. The comparable is larger, so the GLA adjustment is negative, and the financing adjustment is also deducted, giving $256,200.
Option D: $277,000
Option D, $277,000, is the unadjusted sale price. It applies neither the −$10,800 GLA adjustment nor the −$10,000 financing adjustment, which together give $256,200.
Bigger comp, smaller price
When the comparable has more GLA or favorable financing that pushed its price up, take those amounts off its price.
How to use: Use this to set the sign for size and financing adjustments.
Exam Tip
List each adjustment with its sign before adding them up, and note any items the stem tells you not to adjust.
Common Mistakes to Avoid
- -Adding the GLA adjustment for a larger comparable
- -Forgetting the financing adjustment
- -Adjusting for items the facts say are not adjusted
Concept Deep Dive
Analysis
This question tests a two-adjustment grid calculation: a gross living area (GLA) adjustment and a non-market financing adjustment. The comparable is larger than the subject and sold with non-market financing, so both adjustments are downward. The bath count is expressly not adjusted.
Background Knowledge
In a sales comparison grid, each difference between the comparable and the subject is adjusted on the comparable's price. A larger comparable receives a downward size adjustment, and a sale whose price was affected by non-market financing is adjusted to a cash-equivalent basis. The adjustments are then summed to reach the adjusted price.
Real-World Application
A comparable sold with below-market seller financing that the market shows added about $10,000 to the price. The appraiser deducts that amount and also deducts for the comparable's extra living area at a market-supported rate per square foot.
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 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?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
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Previous Question
A comparable property of 20,000 sf sold for a cash-equivalent price of $2,400,000. The subject contains 18,000 sf. The two properties match in property rights, market and method of measuring area, and market data show that the comparable's overall price per square foot applies to the subject. What value does this indicate for the subject?
Next Question
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