In a lakefront market, paired sales show that direct water frontage has the largest price effect of any feature. Which approach to comparable selection best follows from this evidence?
Correct Answer
B) Favor sales with similar frontage, even if somewhat older or farther away
When one characteristic drives the largest price difference, comparables that share it need the smallest and most reliable adjustments. A somewhat older or more distant waterfront sale with a supported time or location adjustment is usually better evidence than a recent non-waterfront sale that needs a large, hard-to-support frontage adjustment. Recency, size and proximity still matter but rank below the dominant feature here.
Why This Is the Correct Answer
Option B is correct because comparables that share the dominant feature need the smallest and most reliable adjustments. A somewhat older or more distant waterfront sale with a supported time or location adjustment is usually better evidence than a recent non-waterfront sale. Recency and proximity still matter but rank below the feature with the largest price effect.
Why the Other Options Are Wrong
Option A: Favor the most recent sales, even if they lack water frontage
Option A, favoring the most recent sales even if they lack water frontage, is wrong because those sales would need a large, hard-to-support frontage adjustment. Recency does not offset missing the feature with the largest price effect.
Option C: Favor the sales closest in living area, with frontage given little weight
Option C, favoring sales closest in living area and giving frontage little weight, is wrong because it downplays the feature the evidence shows has the largest price effect. Size matters, but less than frontage in this market.
Option D: Favor the sales nearest in distance, with frontage given little weight
Option D, favoring the nearest sales and giving frontage little weight, is wrong because proximity does not offset missing the dominant feature. A nearby non-waterfront sale would need a large frontage adjustment.
Match the biggest driver
Pick comparables that share the feature with the largest price effect; smaller differences are easier to adjust.
How to use: Use this when choosing among comparables that each differ in a different way.
Exam Tip
When a stem names the feature with the largest price effect, prefer comparables that share it over those that are simply newer or closer.
Common Mistakes to Avoid
- -Choosing the newest sales regardless of key features
- -Choosing the nearest sales even when they lack the dominant feature
- -Relying on a large unsupported adjustment for the main price driver
Concept Deep Dive
Analysis
This question tests comparable selection when one feature dominates price. If water frontage has the largest price effect, comparables without it would need the biggest and hardest-to-support adjustments. The better choice is sales that share the dominant feature, even if they need smaller time or location adjustments.
Background Knowledge
The best comparables are those that need the fewest and smallest adjustments, especially for the characteristics that most influence price. Large adjustments are harder to support and reduce reliability. Appraisers sometimes widen the time or distance search to find sales sharing a key feature.
Real-World Application
An appraiser valuing a lakefront home finds no waterfront sales in the past six months. The appraiser uses waterfront sales from earlier in the year and around the lake, applying supported time and location adjustments, instead of recent inland sales.
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Market analysis confirms that seller financing at 3%, versus a 6% market rate, increased a comparable sale price. What adjustment removes that financing premium?