Question

Appraiser Donna Dewgood of the firm of Dewgood & Excel is reviewing a faulty appraisal done by appraiser Justin Goodenuf. The subject property is located on Modest Lane and is a 3 bedroom, 2 bath single family residence of 1,600 SF gross living area with a 2 car garage. Which of the following sales used by Mr. Goodenuf should the competent Ms. Dewgood REPLACE in her review appraisal of the subject property?

Sale 1 is a 3 bedroom, 2 bath single family residence, 1,800 SF, 2 car garage

Sale 2 is a 2 bedroom, 2 bath single family residence, 1,600 SF, 2 car garage

Sale 3 is a 3 bedroom, 1.5 bath single family residence, 1,375 SF, 1 car garage

Sale 4 is a 3 bedroom, 1 bath single family residence, 1,512 SF, 1 car garage

Answer 1

Of the given sales used by Mr.Goodneuf, Sale 3 and sale 4 should be replaced. Following are the reasons for considering or not considering the sales:

The method used for appraisal is the comparative market analysis (CMA) approach. In this approach, the recent sales of properties in the same area are compared and adjusted for differences and a price is determined for the property under consideration. The comparables should be similar to the property under consideration.

Sale 1: Both the properties have the same number of bedrooms and baths and also the same garage. However, the area is different and adjustment for the same can be easily made in the appraisal. (3 of the 4 comparables are same)

Sale 2: Both the properties have the same number of baths and also the same garage, however, there is a difference in the number of rooms. However, the area of both the properties is the same. Hence, this property can be considered. (3 of the four comparables are same)

Sale 3: The number of bedrooms is the same, however, the garage is a single car garage and the bath is only a 1.5 bath. Also, the overall area is lesser than the actual property. Hence, there is a substantial difference in the comparables i.e 3 out of the four comparables are different. And this property will have to be replaced.

Sale 4: The number of bedrooms is the same, while the number of baths, the area, and the garage type is different. Hence, there is a substantial difference in the comparables i.e 3 out of the four comparables are different. And this property will have to be replaced.