CGA Sales Comparison Approach 3 — Questions and Answers
Question 1: When selecting comparable sales, an appraiser should FIRST seek comparables that:
- Have the highest adjusted sale prices
- Are located within the same neighborhood or competing market area (Correct answer)
- Were sold by institutional lenders
- Have the fewest number of required adjustments
Correct answer: Are located within the same neighborhood or competing market area
Geographic proximity and market competitiveness are the primary selection criteria because buyers and sellers in the same market set the benchmark for value.
Question 2: A 'bracket' in the sales comparison approach means the appraiser has selected comparables that:
- All sold within 90 days of the effective appraisal date
- Include sales both superior and inferior to the subject for a given attribute (Correct answer)
- Were verified through the MLS database only
- Have identical gross living area to the subject
Correct answer: Include sales both superior and inferior to the subject for a given attribute
Bracketing requires finding comparables on both sides (above and below) of the subject's characteristic, anchoring the subject's value within a defensible range.
Question 3: The most critical reason to verify a sale with a party to the transaction is to:
- Confirm the square footage of finished area
- Determine whether atypical conditions influenced the sale price (Correct answer)
- Establish the zoning classification of the property
- Calculate the cost approach depreciation rate
Correct answer: Determine whether atypical conditions influenced the sale price
Verification with a knowledgeable party — buyer, seller, or broker — reveals motivations, concessions, or conditions that could make the sale non-arm's-length.
Question 4: Which adjustment sequence is considered correct in USPAP-compliant appraisal practice?
- Physical, then location, then transactional
- Transactional adjustments (financing and conditions of sale) before property adjustments (Correct answer)
- Market conditions, then physical, then transactional
- No required sequence; any order yields the same result
Correct answer: Transactional adjustments (financing and conditions of sale) before property adjustments
Transactional adjustments — financing terms and conditions of sale — must be applied first because they normalize the sale price before property characteristics are compared.
Question 5: An appraiser's adjustment for a swimming pool is best supported by:
- The appraiser's subjective professional opinion
- Paired sales of otherwise identical properties with and without pools (Correct answer)
- The contractor's cost to build a new pool
- Neighborhood listing sheets advertising pool value
Correct answer: Paired sales of otherwise identical properties with and without pools
Paired sales analysis using nearly identical properties — one with and one without a pool — directly measures the market's reaction to the feature.
Question 6: A subject property has 2,000 SF of gross living area. Comparable A has 2,200 SF and sold for $440,000. If the per-SF adjustment rate is $100/SF, the adjusted sale price of Comparable A is:
- $420,000 (Correct answer)
- $440,000
- $460,000
- $430,000
Correct answer: $420,000
The comparable has 200 more SF than the subject; at $100/SF that is a -$20,000 downward adjustment, giving $440,000 − $20,000 = $420,000.
Question 7: In reconciliation of the sales comparison approach, an appraiser should give greatest weight to the comparable that:
- Has the highest adjusted sale price
- Required the fewest and smallest dollar adjustments (Correct answer)
- Sold most recently regardless of condition similarity
- Has the most similar location to the subject
Correct answer: Required the fewest and smallest dollar adjustments
The comparable requiring the fewest and smallest adjustments is most similar to the subject and therefore provides the most reliable value indication.
CGA Sales Comparison Approach 3
When selecting comparable sales, an appraiser should FIRST seek comparables that: