Two sets of paired sales, all on a cash-equivalent basis, are alike except for one feature in each set. Homes with and without a pool sold for $505,000 and $480,000. Homes with and without a fireplace sold for $468,000 and $456,000. The subject has both features, and a comparable that sold for $470,000 has neither. The two contributions apply to the comparable, are additive and do not overlap. What is the adjusted sale price of the comparable?
Correct Answer
D) $507,000
470000+(505000−480000)+(468000−456000)=507000. Common errors: leaving out the fireplace contribution gives $495,000; leaving out the pool contribution gives $482,000; subtracting both contributions instead of adding them gives $433,000.
Why This Is the Correct Answer
Option D is correct because the pool contribution is $505,000 − $480,000 = $25,000 and the fireplace contribution is $468,000 − $456,000 = $12,000. The comparable lacks both, so it is adjusted up: $470,000 + $25,000 + $12,000 = $507,000. The effects are additive with no overlap.
Why the Other Options Are Wrong
Option A: $433,000
Option A is wrong because $433,000 subtracts both contributions instead of adding them: $470,000 − $25,000 − $12,000 = $433,000. The comparable is inferior, so both are added, giving $507,000.
Option B: $482,000
Option B is wrong because $482,000 leaves out the pool contribution: $470,000 + $12,000 = $482,000. The $25,000 pool contribution must also be added, giving $507,000.
Option C: $495,000
Option C is wrong because $495,000 leaves out the fireplace contribution: $470,000 + $25,000 = $495,000. The $12,000 fireplace contribution must also be added, giving $507,000.
Pair, Subtract, Then Apply
Subtract within each pair to find a feature's contribution, then add or subtract it from the comparable based on which property has the feature.
How to use: Use these three steps on any paired sales adjustment question.
Exam Tip
Compute each pair difference separately before deciding the direction, and confirm that all stated features are included.
Common Mistakes to Avoid
- -Subtracting contributions from an inferior comparable
- -Leaving out one of the isolated features
- -Mixing up which sale in a pair has the feature
Concept Deep Dive
Analysis
This question tests using paired sales to isolate feature contributions and then applying them to an inferior comparable. Each pair difference gives one feature's contribution. Because the subject has both features and the comparable lacks both, both contributions are added to the comparable.
Background Knowledge
Paired sales analysis compares sales that are alike except for one feature, so the price difference indicates that feature's contribution. Fannie Mae recognizes paired sales as one way to determine adjustment rates. Once isolated, each contribution is applied to the comparable in the direction that makes it like the subject.
Real-World Application
An appraiser finds two sets of nearly identical home sales, one set differing only by a pool and one only by a fireplace. She isolates contributions of $25,000 and $12,000. A comparable without either feature is adjusted up by $37,000 to reflect the subject.
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?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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