Within the sales comparison approach, what is reconciled to reach the approach’s value estimate?
Correct Answer
D) The set of adjusted comparable sales prices
The comparative sales approach typically produces several value indicators, the set of adjusted sales prices, which must be reconciled into a single value estimate for the approach.
Why This Is the Correct Answer
Option D is correct because the sales comparison approach typically produces several value indicators, the set of adjusted sales prices of the comparables. The appraiser weighs and reconciles these adjusted prices to reach a single value estimate for the approach.
Why the Other Options Are Wrong
Option A: The subject’s assessed and insured values
Option A refers to the subject's assessed and insured values. These are not market value indicators produced by the sales comparison approach and are not what the approach reconciles.
Option B: The cost and income approach indications
Option B refers to the cost and income approach indications. Those are reconciled with the sales comparison result in the final reconciliation, not within the sales comparison approach itself.
Option C: The listing prices of current competing homes
Option C refers to listing prices of current competing homes. Listings can be useful supporting data, but the approach's value indicators are the adjusted sale prices of the comparables.
Inside first, then across
First reconcile inside each approach (adjusted comparable prices), then reconcile across approaches (sales, cost, income).
How to use: Use this to decide whether a question is about reconciliation within one approach or among approaches.
Exam Tip
Watch for the words within the sales comparison approach; they point to adjusted comparable prices rather than to the other approaches.
Common Mistakes to Avoid
- -Confusing final reconciliation with reconciliation within one approach
- -Treating assessed or insured value as a market value indicator
- -Reconciling unadjusted sale prices instead of adjusted prices
Concept Deep Dive
Analysis
This question tests the difference between reconciliation within the sales comparison approach and final reconciliation among approaches. Within the approach, the appraiser has several adjusted comparable prices that serve as value indicators. These indicators are reconciled into a single value estimate for that approach.
Background Knowledge
Reconciliation happens at two levels. Within the sales comparison approach, the adjusted prices of the comparables are weighed to reach one indication for the approach. In final reconciliation, the indications from the approaches used are weighed to reach the final value opinion.
Real-World Application
After adjusting four comparables, an appraiser has indications from $412,000 to $425,000. The appraiser gives the most weight to the two sales needing the fewest adjustments and concludes $420,000 as the sales comparison indication.
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?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
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?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
A buyer paid $412,000 for a home in a neighborhood where similar homes recently sold for about $385,000. In an interview, the listing agent explains that the buyer owns the house next door and paid extra to add the side yard to his own lot. Which element of comparison does this information concern?
Next Question
An appraiser is analyzing Comparable 2 for a single-family home appraisal and notes four facts: (I) it went under contract five months before the effective date in a rising market; (II) it has 300 square feet more living area than the subject; (III) the seller carried a second mortgage for the buyer; (IV) it sits on a corner lot. Which facts are transactional elements of comparison?