CRPA Comparable Sales Analysis & Adjustments 2 — Questions and Answers
Question 1: In relocation appraisal, what does 'gross adjustment percentage' measure?
- The sum of all positive adjustments divided by the comparable's sale price
- The absolute sum of all adjustments (positive and negative) divided by the comparable's sale price (Correct answer)
- The net adjustment divided by the subject's estimated value
- The total number of line-item adjustments made to all comparables
Correct answer: The absolute sum of all adjustments (positive and negative) divided by the comparable's sale price
Gross adjustment percentage is the absolute sum of all adjustments divided by the comparable's sale price, indicating the degree of similarity between comparable and subject.
Question 2: When a comparable sale was sold as a bank-owned (REO) property, how should the relocation appraiser typically treat it?
- Use it without adjustment as it reflects current market reality
- Discard it entirely since REO sales are always invalid
- Note the distressed nature and consider whether a market conditions adjustment is warranted or whether it should be excluded (Correct answer)
- Always apply a flat 10% upward adjustment for REO status
Correct answer: Note the distressed nature and consider whether a market conditions adjustment is warranted or whether it should be excluded
REO sales may reflect distressed conditions not applicable to the subject's anticipated exposure period; the appraiser must evaluate their relevance and adjust or exclude accordingly.
Question 3: Which data source is most commonly used to verify that a comparable sale was an arm's-length transaction?
- Zillow automated valuation
- Deed transfer documents only
- Public records, MLS data, and direct buyer/seller or agent confirmation (Correct answer)
- Assessor's estimated market value
Correct answer: Public records, MLS data, and direct buyer/seller or agent confirmation
Verifying arm's-length status requires cross-referencing public records, MLS history, and often direct confirmation from parties involved in the transaction.
Question 4: A comparable sale includes personal property (appliances) valued at $5,000 in the sale price. How should the appraiser handle this?
- Ignore it since personal property is always de minimis
- Make a negative $5,000 adjustment to the comparable to isolate real property value (Correct answer)
- Add $5,000 to the subject's value
- Report it as a condition adjustment
Correct answer: Make a negative $5,000 adjustment to the comparable to isolate real property value
Personal property included in a sale price must be deducted from the comparable to isolate the real property value for a valid comparison.
Question 5: What is 'paired sales analysis' used for in comparable adjustments?
- Comparing two appraisals of the same property
- Identifying market-supported dollar or percentage adjustments by isolating a single variable between two otherwise similar sales (Correct answer)
- Pairing each comparable with a listing to confirm marketability
- Comparing REO and non-REO sales for distress adjustment
Correct answer: Identifying market-supported dollar or percentage adjustments by isolating a single variable between two otherwise similar sales
Paired sales analysis isolates one variable (e.g., garage vs. no garage) between two similar sales to derive a market-supported adjustment amount.
Question 6: When the subject property has superior view amenities compared to all available comparables, the appraiser should:
- Ignore the view difference to avoid speculative adjustments
- Apply a positive adjustment to each comparable to reflect the subject's superior view (Correct answer)
- Apply a negative adjustment to the subject's indicated value
- Use only listings rather than sales as comparables
Correct answer: Apply a positive adjustment to each comparable to reflect the subject's superior view
When the subject is superior, a positive adjustment is added to the comparables to bring them up to the subject's level.
Question 7: What is the significance of a high gross adjustment percentage in a comparable sale used in a relocation appraisal?
- It indicates the comparable is ideal and requires little adjustment
- It suggests the comparable may be significantly dissimilar from the subject, reducing its reliability (Correct answer)
- It means the comparable sold at a premium above market value
- It confirms the comparable is from the same market area
Correct answer: It suggests the comparable may be significantly dissimilar from the subject, reducing its reliability
High gross adjustment percentages signal substantial differences between the comparable and subject, which can undermine the reliability of that comparable.
CRPA Comparable Sales Analysis & Adjustments 2
In relocation appraisal, what does 'gross adjustment percentage' measure?