California Real Estate SalespersonProperty Valuation and Financial AnalysisMedium
An appraiser is comparing a subject property to Comparable A, which sold for $310,000 and has an in-ground pool. The subject property does not have a pool. The appraiser determines the pool adds $8,000 in value. What adjusted value should be used for Comparable A when comparing it to the subject?
- A$302,000
- B$318,000
- C$298,000
- D$310,000
Show answer & explanationAnswer & explanation
Correct answer: A. $302,000
Since the comparable has a feature (the pool) that the subject lacks, the appraiser must subtract the value of that feature from the comparable's sale price to make it comparable to the subject: $310,000 − $8,000 = $302,000.
Why the other options are wrong
- B. Adjustments are always subtracted for features the comparable has that the subject lacks, not added.
- C. This subtracts too much, not matching the $8,000 pool value.
- D. This fails to make any adjustment for the pool difference.
Sales Comparison Adjustment Rule
When a comparable property has a feature the subject lacks, subtract that feature's value from the comparable's price; when the comparable lacks a feature the subject has, add that value.
- Adjust the comparable, never the subject property
- Rule: Comp Superior → Subtract; Comp Inferior → Add
- Adjustments aim to make the comparable equivalent to the subject
Memory trick: CBS: Comp Better, Subtract!