Florida Real Estate Broker ExaminationValuation and Market AnalysisEasy
An appraiser is valuing a single-family home using the sales comparison approach. A comparable property recently sold for $400,000. The comparable has a two-car garage, while the subject property has only a one-car garage. Market analysis indicates that a two-car garage adds $15,000 to a home's value. What adjustment should the appraiser make to the comparable's sales price?
- ASubtract $7,500 from the comparable's price.
- BAdd $15,000 to the comparable's price.
- CAdd $7,500 to the comparable's price.
- DSubtract $15,000 from the comparable's price.
Show answer & explanationAnswer & explanation
Correct answer: D. Subtract $15,000 from the comparable's price.
When a comparable property is superior to the subject property, the appraiser must subtract the value of the superior feature from the comparable's sales price. Since the comparable has a feature (two-car garage) that the subject lacks (one-car garage), the comparable is superior by the value of that extra garage space.
Why the other options are wrong
- A. This is an incorrect amount of adjustment.
- B. Adding would be incorrect; the comparable is superior to the subject, so an adjustment must reduce its price.
- C. This is an incorrect amount and direction of adjustment.
Sales Comparison Adjustment (Superior Comparable)
When a comparable property possesses a feature superior to that of the subject property, the appraiser must subtract the value of that feature from the comparable's sales price.
- Adjustments are made to the comparable property, not the subject.
- Superior features on a comparable lead to a downward adjustment.
- Inferior features on a comparable lead to an upward adjustment.
Memory trick: Always adjust the comparable to match the subject.