When adjustments for a single element run in different directions across comparables, the appraiser should:
Correct Answer
C) Verify the rate is applied consistently to each
Why this is correct: The governing concept is that adjustments must reflect the consistent value difference (rate) for a given feature. Opposite adjustment directions (positive or negative) are normal because some comparable sales are superior and some are inferior to the subject property. The key is that the same dollar amount or percentage rate for that element is applied consistently to each comparable, with the sign (direction) determined by whether the comparable is better or worse than the subject. Why the other choices are wrong: 'Use only the comparables adjusted upward' is wrong because eliminating valid comparables based on adjustment direction introduces bias and reduces the reliability of the analysis. 'Average the adjustments before applying them' is wrong because averaging positive and negative adjustments for the same feature would incorrectly cancel out the real value difference and distort the adjusted sale prices. 'Reduce all adjustments to a single figure' is wrong because this misrepresents the adjustment process; each comparable receives its own specific adjustment based on its individual characteristics relative to the subject. Exam tip: Remember, the adjustment *rate* (e.g., $5,000 for a bathroom) is constant; the *direction* (add or subtract) changes per comparable based on its comparison to the subject.
Why This Is the Correct Answer
Why this is correct: The governing concept is that adjustments must reflect the consistent value difference (rate) for a given feature. Opposite adjustment directions (positive or negative) are normal because some comparable sales are superior and some are inferior to the subject property. The key is that the same dollar amount or percentage rate for that element is applied consistently to each comparable, with the sign (direction) determined by whether the comparable is better or worse than the subject. Why the other choices are wrong: 'Use only the comparables adjusted upward' is wrong because eliminating valid comparables based on adjustment direction introduces bias and reduces the reliability of the analysis. 'Average the adjustments before applying them' is wrong because averaging positive and negative adjustments for the same feature would incorrectly cancel out the real value difference and distort the adjusted sale prices. 'Reduce all adjustments to a single figure' is wrong because this misrepresents the adjustment process; each comparable receives its own specific adjustment based on its individual characteristics relative to the subject. Exam tip: Remember, the adjustment *rate* (e.g., $5,000 for a bathroom) is constant; the *direction* (add or subtract) changes per comparable based on its comparison to the subject.
More sales-comparison-approach Questions
Excess land differs from surplus land in that excess land:
A subject property has a 3-car attached garage. The appraiser locates two valid paired sales: Sale 1 (with 3-car garage) sold for $512,000; Sale 2 (with 2-car garage) sold for $497,600. Both properties are otherwise identical — same age, quality, GLA, lot size, and neighborhood — and sold 5 days apart in a balanced market. The appraiser also confirms via public records and listing photos that no other functional or physical differences exist. What is the indicated contributory value of the *third* garage stall?
The most appropriate unit of comparison is determined by:
An appraiser analyzes three paired sales to isolate the effect of a fireplace. In Pair 1, the property with a fireplace sold for $12,000 more; in Pair 2, $10,500 more; and in Pair 3, $13,500 more. All pairs are highly similar and recent. The appraiser selects $12,000 as the final adjustment. Which principle best supports this selection?
A paired sales analysis yields an adjustment of −$15,000 for a property located on a busy arterial street. Later, the appraiser discovers that all three paired properties with arterial exposure also had 20% smaller lots than their non-arterial counterparts — a difference not initially controlled for. What is the most appropriate action per USPAP?
An appraiser identifies two comparable sales that are identical in all respects except that Sale #1 has a finished basement (1,200 sq ft) and sold for $432,000, while Sale #2 has an unfinished basement of the same size and sold for $408,000. Both sales occurred within three weeks of each other in a stable market. The appraiser intends to apply a per-square-foot adjustment for basement finish to the subject property, which has a 1,000 sq ft finished basement. What is the appropriate paired-sales-derived adjustment amount per square foot for a finished basement?
Three sales support $520,000; the borrower's purchase contract is $505,000. May the appraisal conclude above the contract price?
An appraiser develops a $3,200 adjustment for a fireplace based on a single paired sale. The subject has a fireplace; Comparable A does not. The appraiser applies +$3,200 to Comparable A. Later, the appraiser identifies a second pair showing a $4,600 fireplace contribution. The appraiser replaces the original adjustment with $3,900 — the simple average — and applies it to Comparable A. What is the appropriate USPAP-compliant action regarding the adjustment amount?
A comparable sold for $300,000 with the seller carrying a loan 2 points below market, a benefit worth $8,000. What is its cash-equivalent price?
Three comparables adjust to $412,000 (gross adj. 5%), $405,000 (gross adj. 22%), and $410,000 (gross adj. 8%). What is the best-supported value conclusion?
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