Florida Real Estate Broker ExaminationValuation and Market AnalysisMedium
An appraiser is valuing a single-family home using the sales comparison approach. A comparable property recently sold for $450,000. It has a two-car garage, while the subject property has only a one-car garage. The market indicates that a two-car garage adds $15,000 in value compared to a one-car garage. What adjustment should be made to the comparable property's sales price?
- AAdd $15,000 to the comparable's price.
- BNo adjustment is needed as the comparable is superior.
- CSubtract $15,000 from the comparable's price.
- DAdd $7,500 to the comparable's price.
Show answer & explanationAnswer & explanation
Correct answer: C. Subtract $15,000 from the comparable's price.
When a comparable property is superior to the subject property, the value of the superior feature is subtracted from the comparable's sales price. Since the comparable has a two-car garage (superior) and the subject has a one-car garage, $15,000 must be subtracted from the comparable.
Why the other options are wrong
- A. This would be done if the comparable was inferior to the subject property.
- B. Adjustments are always made to the comparable to make it similar to the subject.
- D. This is an arbitrary amount and does not follow appraisal principles.
Sales Comparison Adjustment
Modifications made to the sales prices of comparable properties to account for differences between them and the subject property.
- Always adjust the comparable, never the subject.
- If comparable is superior, subtract value.
- If comparable is inferior, add value.
Memory trick: Compare and Correct: Make the Comparables Reflect!