Which principle should govern priority among location, physical characteristics, timing and transaction conditions when selecting comparables?
Correct Answer
B) Their relevance and supported effects in the subject’s competitive market
Comparable selection weighs verified competitive relevance, property characteristics, transaction terms and timing in the particular market. No universal ranking makes location, physical similarity or sale conditions always decisive. Investigate the evidence rather than apply a fixed hierarchy.
Why This Is the Correct Answer
Option B is correct because the importance of location, physical characteristics, timing and transaction conditions varies from market to market. The appraiser weighs each factor by its relevance and supported effect on value in the subject's competitive market.
Why the Other Options Are Wrong
Option A: Location outranks the other factors because it cannot be adjusted
Option A says location outranks the other factors because it cannot be adjusted. Location differences can be adjusted when market evidence supports it, and no universal ranking places location above all other factors.
Option C: Physical differences rank below location and timing, so they need less support
Option C says physical differences rank below location and timing and so need less support. Each adjustment needs market support, regardless of which element of comparison it addresses.
Option D: Transaction conditions require excluding any atypical sale
Option D says transaction conditions require excluding any atypical sale. An atypical sale may still be usable if its conditions can be verified and adjusted for, so exclusion is not required in every case.
The market sets the priority
What matters most in choosing comparables is what buyers and sellers in that market actually react to.
How to use: Use this when a question offers a fixed ranking of elements of comparison.
Exam Tip
Answers claiming a universal hierarchy or that some adjustments need less support are usually incorrect.
Common Mistakes to Avoid
- -Assuming location cannot be adjusted
- -Believing some adjustments need less support than others
- -Excluding any atypical sale without analysis
Concept Deep Dive
Analysis
This question tests how an appraiser prioritizes elements of comparison when selecting comparables. Rather than a fixed ranking, the priority depends on which factors are relevant and have supported effects in the subject's particular market.
Background Knowledge
The primary elements of comparison include property rights conveyed, financing terms, conditions of sale, market conditions, location and physical characteristics. Appraisers select comparables similar to the subject in these elements and analyze which differences matter most in the specific market. Adjustments must be supported by market evidence.
Real-World Application
In one suburb, buyers pay large premiums for a specific school district, while in a nearby rural area lot size and acreage drive price more. The appraiser selects comparables in each market based on which factors local evidence shows matter most.
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The financially feasible test in highest and best use analysis determines whether: