Which statement best expresses why net adjustments are divided by the sale price of the comparable?

Which statement best expresses why net adjustments are divided by the sale price of the comparable?

• A. To express the adjustment as a percentage of the sale price.
• B. To convert the adjustment to a dollar amount.
• C. To convert to an annual rate.
• D. To disregard the sale price entirely.

Answer: (A)

Expressing net adjustments as a percentage of the sale price standardizes differences across comparables with different price levels. Net adjustments reflect how much you must add or subtract to reflect each comp’s differences from the subject property. If you keep adjustments in dollars, the impact of those adjustments varies with how expensive each comp is. By dividing the adjustment by the comp’s sale price, you convert that dollar amount into a proportion, a percent, that can be compared across all comps. For example, a $8,000 adjustment on a $200,000 sale is 4%, while the same $8,000 on a $400,000 sale is 2%, showing the relative significance consistently. This helps appraisers evaluate and compare adjustments across different price ranges and choose a more consistent subject value.

Expressing net adjustments as a percentage of the sale price standardizes differences across comparables with different price levels. Net adjustments reflect how much you must add or subtract to reflect each comp’s differences from the subject property. If you keep adjustments in dollars, the impact of those adjustments varies with how expensive each comp is. By dividing the adjustment by the comp’s sale price, you convert that dollar amount into a proportion, a percent, that can be compared across all comps. For example, a $8,000 adjustment on a $200,000 sale is 4%, while the same $8,000 on a $400,000 sale is 2%, showing the relative significance consistently. This helps appraisers evaluate and compare adjustments across different price ranges and choose a more consistent subject value.