When are percentage adjustments preferable to dollar adjustments?
Correct Answer
B) Where the difference scales with property value
Why this is correct: Percentage adjustments are most appropriate when the value impact of a difference is proportional to the property's value. The classic example is a market conditions (time) adjustment, as price changes typically affect all properties in a market by a similar percentage. Why the other choices are wrong: The choice stating whenever the comparable exceeds the subject in size is incorrect; size adjustments can be dollar-based (e.g., price per square foot). The choice stating whenever more than three comparables are used is wrong; the number of comparables doesn't dictate the adjustment type. The choice stating where the appraiser cannot verify the sale price is false; verification issues don't determine adjustment methodology. Exam tip: Use percentage for proportional differences (like time). Use dollar amounts for fixed-value features (like a pool).
Why This Is the Correct Answer
Why this is correct: Percentage adjustments are most appropriate when the value impact of a difference is proportional to the property's value. The classic example is a market conditions (time) adjustment, as price changes typically affect all properties in a market by a similar percentage. Why the other choices are wrong: The choice stating whenever the comparable exceeds the subject in size is incorrect; size adjustments can be dollar-based (e.g., price per square foot). The choice stating whenever more than three comparables are used is wrong; the number of comparables doesn't dictate the adjustment type. The choice stating where the appraiser cannot verify the sale price is false; verification issues don't determine adjustment methodology. Exam tip: Use percentage for proportional differences (like time). Use dollar amounts for fixed-value features (like a pool).
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