When selecting comparable sales, an appraiser finds a sale that occurred 8 months ago with excellent location and size similarity to the subject, and a recent sale with good similarity but requiring significant adjustments. The appraiser should:
Correct Answer
B) Use both, adjusting for time and other differences
Why this is correct: Using multiple comparables with appropriate adjustments for time (on the older sale) and physical characteristics (on the newer sale) provides a stronger, more reliable analysis than relying on a single sale. Why the other choices are wrong: "Reject both sales and find different comparables" wastes useful market data. "Use only the recent sale, avoiding time adjustments" ignores a good comparable due to age, when a time adjustment can be made. "Use only the older sale, for its better similarity" ignores recent market evidence and may require fewer adjustments on the newer sale. Exam tip: Use all relevant comparables; just make proper adjustments for differences.
Why This Is the Correct Answer
Option C is correct because both sales provide valuable market information that can be properly adjusted to reflect the subject property's characteristics and current market conditions. The 8-month-old sale offers excellent similarity requiring only a time adjustment, while the recent sale provides current market timing but needs property characteristic adjustments. Using multiple comparables with appropriate adjustments creates a stronger, more reliable analysis than relying on a single data point, which is a fundamental principle of the sales comparison approach.
Why the Other Options Are Wrong
TEAM Approach
T-ime adjustments are acceptable, E-xcellent similarity beats perfect timing, A-djustments make comparables usable, M-ultiple data points strengthen analysis
How to use: When facing comparable selection questions, remember TEAM: consider if Time adjustments can be made, whether Excellent similarity exists, if Adjustments are feasible, and that Multiple comparables are better than one.
Exam Tip
Look for answer choices that maximize the use of available market data through proper adjustments rather than eliminating good comparables due to minor deficiencies.
Common Mistakes to Avoid
- -Rejecting older sales simply to avoid time adjustments
- -Using only one comparable when multiple good options exist
- -Believing that perfect comparables exist and should be found rather than making appropriate adjustments
Concept Deep Dive
Analysis
This question tests the appraiser's understanding of comparable selection principles and the adjustment process in the sales comparison approach. The core concept is that appraisers should maximize the use of available market data while maintaining reliability through proper adjustments. Good comparable sales are valuable market indicators regardless of minor deficiencies, as long as appropriate adjustments can be made to account for differences. The goal is to extract meaningful market information from multiple sources to support a well-reasoned value conclusion.
Background Knowledge
The sales comparison approach requires appraisers to select the best available comparable sales and make adjustments for differences in time, location, physical characteristics, and other factors. Multiple comparables provide better market support than single data points, and proper adjustments can account for various differences between comparables and the subject property.
Real-World Application
In practice, appraisers rarely find perfect comparables and must regularly make time adjustments for sales that occurred months ago, as well as adjustments for differences in size, condition, location, and features. The key is using professional judgment to determine which adjustments are supportable and reliable.
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