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.
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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?