CRPA Comparable Sales Analysis & Adjustments 1 — Questions and Answers
Question 1: In a relocation appraisal, what is the primary criterion for selecting a comparable sale?
- The sale must have occurred within the last 6 months regardless of location
- The comparable should reflect similar market conditions, location, and physical characteristics to the subject (Correct answer)
- Only foreclosure sales should be used as comparables to establish distressed market value
- Comparables must always be located within the same subdivision as the subject property
Correct answer: The comparable should reflect similar market conditions, location, and physical characteristics to the subject
Comparable sales should closely mirror the subject in terms of market conditions, location, and physical features to produce a credible value opinion.
Question 2: When making a dollar adjustment for a swimming pool that the comparable has but the subject lacks, the adjustment to the comparable's sale price would be:
- Positive, adding the pool's contributory value to the comparable's price
- Negative, subtracting the pool's contributory value from the comparable's price (Correct answer)
- Zero, because amenities never affect value in relocation appraisals
- Positive only if the pool is in-ground
Correct answer: Negative, subtracting the pool's contributory value from the comparable's price
When the comparable has a feature the subject lacks, a negative adjustment is made to the comparable's price to equate it to the subject.
Question 3: What does the term 'net adjustment' mean when applied to a comparable sale?
- The total of all upward adjustments made to the comparable
- The total of all downward adjustments made to the comparable
- The algebraic sum of all positive and negative adjustments applied to a comparable (Correct answer)
- The average adjustment divided by the number of line items
Correct answer: The algebraic sum of all positive and negative adjustments applied to a comparable
Net adjustment is the algebraic sum of all positive and negative adjustments, reflecting the overall difference between the comparable and subject.
Question 4: Under ERC appraisal guidelines, what is the maximum recommended time frame for comparable sales used in a relocation appraisal in a stable market?
- 3 months
- 6 months (Correct answer)
- 12 months
- 24 months
Correct answer: 6 months
ERC guidelines generally recommend using comparable sales within the prior 6 months in a stable market to ensure relevance to current conditions.
Question 5: Which type of adjustment accounts for the difference in sale date between the comparable and the effective date of the appraisal?
- Location adjustment
- Condition adjustment
- Market conditions (time) adjustment (Correct answer)
- Gross living area adjustment
Correct answer: Market conditions (time) adjustment
Market conditions (time) adjustments account for price changes between the comparable's sale date and the appraisal's effective date.
Question 6: A comparable sale has 200 more square feet of gross living area (GLA) than the subject. If the market-derived rate is $50/SF, the adjustment applied to the comparable is:
- +$10,000
- -$10,000 (Correct answer)
- +$5,000
- -$5,000
Correct answer: -$10,000
Since the comparable is superior in size, a negative adjustment of 200 × $50 = $10,000 is applied to equate it to the smaller subject.
Question 7: What is the purpose of bracketing comparables in a relocation appraisal?
- To ensure all comparables are from the same neighborhood
- To show that the subject's indicated value falls between sales that are superior and inferior in key features (Correct answer)
- To limit the number of comparables to three
- To confirm that all comparables were sold at arm's length
Correct answer: To show that the subject's indicated value falls between sales that are superior and inferior in key features
Bracketing demonstrates credibility by showing that the subject's value conclusion is supported by sales both above and below it in relevant features.
CRPA Comparable Sales Analysis & Adjustments 1
In a relocation appraisal, what is the primary criterion for selecting a comparable sale?