Ch 9 Case Study

Question 1

What is the net adjustment for Comp 3?

Answer 1

-$13,600
Comp 3 required 4 adjustments: -6,300 for financing concessions, -4,800 for GLA, +2,500 for central air, and -5,000 for pool. This would be a net adjustment of negative $13,600. Dividing $13,600 by $210,000 = 0.645 or 6.5% rounded. (Ch 9, Case Study)

Question 2

What is the final indicated value of the subject property?

Answer 2

$195,000
The sales comparison approach should be given the most weight, which would indicate $195,000. An indication of $197,050 would mean that the appraiser averaged the indicated values of the sales comparison and cost approaches, which is not appropriate. (Ch 9, Case Study)

Question 3

What is the net adjustment percentage for Comp 3?

Answer 3

6.5%

Question 4

What is the percentage of depreciation for the subject property?

Answer 4

25%

Effective age 15 divided by total economic life of 60 = 25%. (Ch 9, Case Study)

Question 5

Which sale had the highest gross adjustment percentage?

Answer 5

Comp 1

Question 6

What is the indicated value of the subject property by the sales comparison approach?

Answer 6

$195,000
Comp 2 indicates $195,000 and should be given the most weight. An indication of $195,200 would mean that the appraiser averaged the indicated values of all three comparable sales, which is not appropriate. (Ch 9, Case Study)

Question 7

What is the appropriate adjustment to Comp 3 for financing terms?

Answer 7

-$6,300
There were seller concessions amounting to 3% of the sales price. We had indicated that in this situation, a dollar-for-dollar adjustment would be appropriate, so $210,000 x .03 = $6,300. This would be a negative adjustment. (Ch 9, Case Study)

Question 8

Which sale should receive the most weight in the reconciliation process?

Answer 8

Comp 2
Comp 2 only required one relatively small adjustment and has the same size as the subject and also has no pool. (Ch 9, Case Study)

Question 9

Which sale had the lowest net adjustment percentage?

Answer 9

Comp 2

Comp 1 - 8%, Comp 2 - 3%, Comp 3 - 6.5%. Comp 2 is the lowest at 3%. (Ch 9, Case Study)

Question 10

What is your opinion of the subject’s site value?

Answer 10

$46,000

Site value was reconciled at $2.30 per square foot x 20,000 SF = $46,000. (Ch 9, Case Study)

Question 11

What is the GLA adjustment required on Comp 1?

Answer 11

+$3,200
Size difference is 160 SF (2610-2450). 160 x $20 per SF = $3,200. This would be a positive adjustment because the subject is larger. (Ch 9, Case Study)

Question 12

What is the net adjustment for Comp 1?

Answer 12

+$14,200
Comp 1 required 4 adjustments: +10,000 for condition, +3,200 for GLA, +6,000 for garage, and -5,000 for in-ground pool. This would be a net adjustment of $14,200. (Ch 9, Case Study)

Question 13

What is the cost new of the improvements (excluding site improvements)?

Answer 13

$196,095
Home: 2,610 x 71.50 = $186,615. Garage 480 x 16.00 = $7,680. Covered porch: 60 x 12.50 = $750. Patio: 300 x $3.50 = $1,050. Total cost new = $196,095. (Ch 9, Case Study)