California Real Estate SalespersonProperty Valuation and Financial AnalysisMedium
An appraiser is comparing a subject property to Comparable A. Comparable A sold for $500,000. It has a larger lot, which an adjustment grid indicates is worth $10,000 more than the subject's lot. Comparable A also has an extra garage space, valued at $5,000, which the subject lacks. What is the adjusted sales price of Comparable A?
- A$495,000
- B$505,000
- C$515,000
- D$485,000
Show answer & explanationAnswer & explanation
Correct answer: D. $485,000
When a comparable property is superior to the subject property, its sales price must be adjusted downward. Here, Comparable A has a larger lot (superior by $10,000) and an extra garage space (superior by $5,000). So, $500,000 - $10,000 - $5,000 = $485,000.
Why the other options are wrong
- A. This incorrectly subtracts only one of the adjustments or makes a math error.
- B. This is an incorrect calculation, possibly subtracting only the garage or making a math error.
- C. This incorrectly adds the adjustments to the comparable's price.
Sales Comparison Approach Adjustments
The process of modifying the sales prices of comparable properties to account for differences between them and the subject property.
- Adjustments are always made to the comparable property, not the subject.
- If comparable is superior, subtract from its price (CBS: Comparable Better, Subtract).
- If comparable is inferior, add to its price (CIA: Comparable Inferior, Add).
Memory trick: CBS (Comparable Better Subtract), CIA (Comparable Inferior Add).