When a comparable requires an adjustment the appraiser cannot support, the best course is:
Correct Answer
B) Seek support or better sales and decide if credible analysis remains
Seek better information, better comparables or an appropriate supported method, and determine whether the overall analysis can be credible. Merely disclosing a materially unsupported adjustment does not supply its evidentiary basis or cure a deficient scope.
Why This Is the Correct Answer
Option B is correct because adjustments must be market based, so an unsupported adjustment calls for more research rather than a guess. The appraiser should seek better data, better comparables or an appropriate supported method. The appraiser then decides whether the overall analysis can still produce credible assignment results.
Why the Other Options Are Wrong
Option A: Use an arbitrary amount, as long as the report says it is arbitrary
Option A, using an arbitrary amount as long as the report says it is arbitrary, is wrong because disclosure does not supply the missing evidence. A materially unsupported adjustment remains unsupported even when it is labeled honestly.
Option C: Copy an unsupported adjustment amount from an earlier appraisal report
Option C, copying an unsupported adjustment amount from an earlier appraisal report, is wrong because an amount with no market support does not gain support by being reused. Adjustments must reflect the current market's reaction to the specific difference.
Option D: Ignore the material difference without investigating it any further
Option D, ignoring the material difference without investigating it, is wrong because the scope of work must include the research and analysis needed for credible results. Skipping a material difference leaves the comparable's indication unreliable.
Support it or replace it
An adjustment you cannot support should send you back to the data: find support for it or find a better comparable.
How to use: Use this when an answer choice offers to cover a weak adjustment with disclosure or a borrowed number.
Exam Tip
Choices that rely on disclosure alone, reuse of old numbers or ignoring a difference usually fail the credibility test. Look for the option that adds research and evidence.
Common Mistakes to Avoid
- -Believing a disclosed arbitrary adjustment is acceptable
- -Reusing adjustment amounts from old reports without current market support
- -Skipping a material difference because data are hard to find
Concept Deep Dive
Analysis
This question tests what an appraiser should do when a material difference between a comparable and the subject cannot be supported with market evidence. Adjustments must reflect the market's reaction to differences, and the scope of work must include the research needed for credible results. The sound response is to look for support or better comparables and then judge whether the analysis can still be credible.
Background Knowledge
In the sales comparison approach, adjustments account for differences between each comparable and the subject, and they should reflect how the market reacts to those differences. When evidence for an adjustment is lacking, appraisers can widen research, choose more similar sales or use another supported technique. If credible results cannot be reached, the scope of work is not adequate.
Real-World Application
An appraiser finds that the only nearby sale has a large detached workshop the subject lacks, and no paired data show its contribution. The appraiser expands the search to similar neighborhoods, locates sales with and without workshops, and uses them to support the adjustment. If no support can be found, the appraiser weighs whether that comparable should receive little reliance.
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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