A sales-comparison exercise starts with a comparable property's sale price and adjusts it for stated differences from the subject. The arithmetic is usually manageable. The difficult part is deciding which number changes, which sign belongs beside it, and what the result actually tells you.
These are original practice problems for Florida real estate students, not questions from the state examination or appraisals of actual properties. All prices, adjustment amounts and weights are invented. Read the facts, try each calculation, then check the explanation.
Before you reach for the calculator
The subject is the property being valued. The comparable is the property whose sale supplies evidence. For the physical-feature differences in these exercises, add when the comparable is inferior and subtract when it is superior. Our explanation of why the comparable is adjusted covers the reasoning.
In actual appraisal work, the amounts need evidence from the market. A remembered allowance for a garage, or the owner's renovation bill, is not enough. Fannie Mae's adjustment guidance makes this distinction. Here, the problem supplies the amounts so that you can concentrate on the method.
Problem 1: Several differences, one adjusted price
A comparable sold for $312,000. Assume the following are the only relevant differences and that the supplied amounts are supported for this exercise:
| Feature | Comparable's position | Adjustment |
|---|---|---|
| Garage | Inferior to the subject | Add $14,000 |
| Condition | Superior to the subject | Subtract $9,000 |
| Location | Inferior to the subject | Add $6,000 |
What is the adjusted sale price?
Answer: $323,000
Write the complete line before calculating: $312,000 + $14,000 - $9,000 + $6,000 = $323,000. The adjustments total a positive $11,000, so the adjusted result should be higher than the original sale price.
If you got $301,000, you probably reversed every sign. If you got $341,000, you added the superior-condition amount instead of subtracting it. Checking the direction of each difference is more useful than entering the same calculation again.
The $323,000 is this comparable's adjusted indication under the exercise's assumptions. It is not automatically a final appraisal conclusion.
Problem 2: Can zero net adjustment still involve adjustments?
Comparable B sold for $320,000. It needs a positive $12,000 adjustment for one difference and a negative $12,000 adjustment for another. Calculate its adjusted price, net adjustment and gross adjustment.
Answer: $320,000; $0 net; $24,000 gross
The adjusted price is $320,000 + $12,000 - $12,000 = $320,000. Net adjustment keeps the signs: positive $12,000 and negative $12,000 cancel. Gross adjustment adds the magnitudes without cancelling them: $12,000 + $12,000 = $24,000.
If the exercise asks for percentages based on the original sale price, the net percentage is 0%, while the gross percentage is $24,000 / $320,000 x 100 = 7.5%. Zero net does not mean the properties were identical. Two differences happened to offset each other.
Problem 3: Use the weights you are given
A separate arithmetic exercise supplies three adjusted indications: A is $320,000, B is $328,000 and C is $330,000. It expressly assigns weights of 50%, 30% and 20%. What result follows?
Answer: $324,400
- A: $320,000 x 0.50 = $160,000.
- B: $328,000 x 0.30 = $98,400.
- C: $330,000 x 0.20 = $66,000.
Add the weighted amounts: $160,000 + $98,400 + $66,000 = $324,400. Check that the weights add to 100% and the result lies between $320,000 and $330,000.
The simple average would be a different calculation. Use it only when the question calls for equal weighting. In practice, reconciliation considers the quality of the evidence; it is not a requirement to assign these percentages or mechanically average every sale. The IAAO appraisal glossary explains reconciliation as evaluating the strengths and weaknesses of the available valuation evidence.
One last check
A comparable sold for $330,000. The exercise gives an $8,000 inferior-feature adjustment and a $5,000 superior-feature adjustment. The adjusted price is $333,000: $330,000 + $8,000 - $5,000. Its net adjustment is $3,000, but its gross adjustment is $13,000. Label those three answers separately.
Keep practicing with Chapter 17 appraisal questions. For the bigger picture, read the guide to value and the three appraisal approaches. Then compare this method with the replacement and reproduction cost worksheet, which starts from costs rather than adjusted sales.
You can start the free course to work through the full lesson sequence. The pricing page explains the separate certificate charge.
