Which data set is a primary way to estimate a market conditions (time) adjustment?
Correct Answer
D) Repeat sales of the same property with no significant change
A market conditions adjustment can be estimated by measuring the price difference when the same property sells more than once over a period with no significant change in the property between sales.
Why This Is the Correct Answer
Option D is correct because a market conditions adjustment can be estimated by measuring the difference in sales prices when the same property sells more than once over a period of time with no significant change in the property between sales. Because the property is unchanged, the price difference reflects changing market conditions. This makes resales a primary data set for the adjustment.
Why the Other Options Are Wrong
Option A: Changes in local construction cost indexes over the period
Option A, changes in local construction cost indexes, measures the cost of building, not changes in market prices of existing properties. Cost trends are not the stated primary data set for a time adjustment.
Option B: The change in the subject’s assessed value from year to year
Option B, the change in the subject's assessed value from year to year, reflects the assessment process, not a measured change in market sale prices.
Option C: Listing prices of homes currently offered in the neighborhood
Option C, listing prices of homes currently offered, are asking prices rather than completed sales. They do not measure how sale prices changed over a period.
Same house, two sales
When an unchanged property sells twice, the price difference shows how the market moved.
How to use: Use this to identify the primary data for a market conditions adjustment.
Exam Tip
Prefer options based on actual sales of unchanged properties over cost, assessment or asking-price data.
Common Mistakes to Avoid
- -Using construction cost trends as a time adjustment
- -Using a resale pair when the property was renovated between sales
Concept Deep Dive
Analysis
This question tests the primary ways to estimate a market conditions (time) adjustment. One primary method measures price changes when the same property sells more than once over a period with no significant change in the property. The distractors use cost, assessment or asking-price data that do not directly measure market price change.
Background Knowledge
Market conditions adjustments account for changes in prices between a comparable's sale date and the effective date. Resales of the same unchanged property are a direct way to measure that change. Time adjustments must be supported by evidence.
Real-World Application
An appraiser finds a condo that sold in the spring and again in the fall with no updates in between. Along with other market data, the resale helps support the monthly rate the appraiser applies to older comparables.
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?
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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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Previous Question
A comparable has a cash-equivalent sale price of $662,000. The subject and comparable have the same rights and relevant characteristics except for one permanent real-property feature. Verified market evidence supports a $58,000 contributory difference: the comparable has the superior feature and the subject lacks it. Adjust only the comparable toward the subject. What is its adjusted price?
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