Question

Adjustments for physical characteristics are intended to capture the dimensions in which a comparable property differs physically from the subject property. If the only physical difference between the subject property and the comparable is that the comparable does not have a fireplace, which of the following adjustments should take place?A. The transaction price of the comparable property should be adjusted downward.B. The transaction price of the comparable property should be adjusted upward. C. The transaction price of the subject property should be adjusted downward.D. The transaction price of the subject property should be adjusted upward.

Answer 1

Answer:

D) The transaction price of the subject property should be adjusted upward.

Explanation:

In real estate, when an appraiser uses the sales comparison approach, they will compare the price of recently sold properties that are similar to the property that they want to appraise, e.g. 3 bedroom homes, with 2 bathrooms and 2 garages on the same neighborhood.

In this case, the subject property is very similar to the comparable property which was recently sold, only that the subject property has one more amenity, a fireplace. That means that the transaction price (value) of the subject property should be slightly higher than the transaction price of the comparable property.