Why does paired-data analysis often fail for a feature like 'quality of construction'?
Correct Answer
D) Sales rarely differ in quality alone, so the pair isn't clean
Why this is correct: For paired-data analysis to work cleanly, the two sales must differ only in the feature being studied. Construction quality is typically bundled with other differences (size, finishes, age), making a "clean pair" rare. Why the other choices are wrong: Quality differences are visible and can be described. Appraisal standards do allow adjustments for construction quality. The method can theoretically work; the problem is practical data availability. Exam tip: Paired-data is best for isolated features like a pool or garage. For complex qualities, you'll need other methods like cost or regression analysis.
Why This Is the Correct Answer
Why this is correct: For paired-data analysis to work cleanly, the two sales must differ only in the feature being studied. Construction quality is typically bundled with other differences (size, finishes, age), making a "clean pair" rare. Why the other choices are wrong: Quality differences are visible and can be described. Appraisal standards do allow adjustments for construction quality. The method can theoretically work; the problem is practical data availability. Exam tip: Paired-data is best for isolated features like a pool or garage. For complex qualities, you'll need other methods like cost or regression analysis.
More sales-comparison-approach Questions
Excess land differs from surplus land in that excess land:
A subject property has a 3-car attached garage. The appraiser locates two valid paired sales: Sale 1 (with 3-car garage) sold for $512,000; Sale 2 (with 2-car garage) sold for $497,600. Both properties are otherwise identical — same age, quality, GLA, lot size, and neighborhood — and sold 5 days apart in a balanced market. The appraiser also confirms via public records and listing photos that no other functional or physical differences exist. What is the indicated contributory value of the *third* garage stall?
The most appropriate unit of comparison is determined by:
An appraiser analyzes three paired sales to isolate the effect of a fireplace. In Pair 1, the property with a fireplace sold for $12,000 more; in Pair 2, $10,500 more; and in Pair 3, $13,500 more. All pairs are highly similar and recent. The appraiser selects $12,000 as the final adjustment. Which principle best supports this selection?
A paired sales analysis yields an adjustment of −$15,000 for a property located on a busy arterial street. Later, the appraiser discovers that all three paired properties with arterial exposure also had 20% smaller lots than their non-arterial counterparts — a difference not initially controlled for. What is the most appropriate action per USPAP?
An appraiser identifies two comparable sales that are identical in all respects except that Sale #1 has a finished basement (1,200 sq ft) and sold for $432,000, while Sale #2 has an unfinished basement of the same size and sold for $408,000. Both sales occurred within three weeks of each other in a stable market. The appraiser intends to apply a per-square-foot adjustment for basement finish to the subject property, which has a 1,000 sq ft finished basement. What is the appropriate paired-sales-derived adjustment amount per square foot for a finished basement?
Three sales support $520,000; the borrower's purchase contract is $505,000. May the appraisal conclude above the contract price?
An appraiser develops a $3,200 adjustment for a fireplace based on a single paired sale. The subject has a fireplace; Comparable A does not. The appraiser applies +$3,200 to Comparable A. Later, the appraiser identifies a second pair showing a $4,600 fireplace contribution. The appraiser replaces the original adjustment with $3,900 — the simple average — and applies it to Comparable A. What is the appropriate USPAP-compliant action regarding the adjustment amount?
A comparable sold for $300,000 with the seller carrying a loan 2 points below market, a benefit worth $8,000. What is its cash-equivalent price?
Three comparables adjust to $412,000 (gross adj. 5%), $405,000 (gross adj. 22%), and $410,000 (gross adj. 8%). What is the best-supported value conclusion?
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Previous Question
GLA differs by 210 sq ft between subject and comparable. Paired sales support $65 per sq ft of living area. The line adjustment is:
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A residential appraisal includes three comparables. One comparable has a 15% larger lot than the subject. The appraiser applies a dollar adjustment of −$12,500 to that comparable’s sale price. A second comparable has a 10% smaller lot and receives a +$7,800 adjustment. The third comparable has a 5% larger lot and receives −$4,100. Which adjustment sequence most likely complies with USPAP Standards Rule 1-4 and common industry practice?