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SAEE - Market Approach Application Questions and Answers Flashcards

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  1. An appraiser is using the sales comparison approach and finds that a comparable sold for $320,000 but has a 2-car garage while the subject has a 1-car garage. Market data shows a 1-car garage adds $12,000 in value. What adjustment is made to the comparable?

    Answer: Subtract $12,000 from the comparable

    Since the comparable is superior (has a 2-car garage), you subtract $12,000 from the comparable's sale price to make it equivalent to the subject.

  2. Paired sales analysis is used primarily to:

    Answer: Isolate the market value contribution of a single feature

    Paired sales analysis compares two otherwise similar sales that differ in only one feature to isolate and quantify that feature's market contribution.

  3. A comparable sale closed 18 months ago at $280,000. Market data indicates values have increased 2% per year. What is the time-adjusted sale price?

    Answer: $288,480

    18 months = 1.5 years; $280,000 × (1 + 0.02)^1.5 = $280,000 × 1.03015 ≈ $288,442, closest to $288,480.

  4. In the sales comparison approach, 'bracketing' refers to:

    Answer: Selecting comparables both superior and inferior to the subject for each key feature

    Bracketing ensures the subject's value is supported by comparables on both sides of each attribute, reducing the risk of systematic bias.

  5. Which of the following is the CORRECT order for applying adjustments in the sales comparison approach?

    Answer: Conditions of sale, then market conditions, then location, then physical characteristics

    The correct sequence is: (1) conditions of sale/financing, (2) market conditions (time), (3) location, then (4) physical characteristics.

  6. An appraiser derives the following adjusted values for three comparables: $415,000, $421,000, and $419,000. The subject property is most similar to Comparable 2. What value conclusion is MOST defensible?

    Answer: $421,000 because it reflects the most similar comparable

    The most defensible value gives greatest weight to the comparable most similar to the subject, which is Comparable 2 at $421,000.

  7. A comparable sale had seller-paid closing costs of $8,000 that were not typical for the market. How should this be handled?

    Answer: Subtract $8,000 from the comparable's sale price as a conditions-of-sale adjustment

    Seller-paid concessions inflate the nominal sale price; subtracting them converts the price to a cash-equivalent, market-typical basis.