Question

Given the following information, what adjustment would need to be made to account for the living area difference between the subject property and comparable property?

	Adjustments
Market conditions	-0.50% (per month)
Lot size	$25,000 (per acre)
Effective age (years)	$1,000 (per year)
Living area (sq. ft)	$45.00 (per sq. ft.)
Bath	$1,250 (per bath)
Bedrooms	$3,000 (per bedroom)

	Subject Property	Comparable Property
Time sold	Today	4 months ago
Lot size (acres)	0.83	0.80
Effective age (years)	8	7
Living area (sq. ft)	2,197	2.383
Bath	3.5	3.5
Bedrooms	4	4
Sale price	-	$287,000

Answer 1

Answer:-$284,120

Present value of comparable property = sales price 4 months ago× (1+ market condition rate)^no of months
= $287,000 × (1+ 0.005) ^ 4 = $287,000×1.02 ^4

=$292,740

Adjustment for lot size = $25,000 ( Lot size of subject property - Lot sae of comparable property)

= $25,000 (0.83 - 0.80)

=$750 Since price will go down with increasing age of property, Adjustment for effective age = - $1,000 (Age of subject property - Age of comparable property) = - $1.000 ( 8 - 7) = - $1.000

Adjustment for living area = $45" ( living area of subject property - living area of comparable property) = $45 -(2.197 - 2,383) = $45 -(- 186)
= - $8,370

Final appraisal value = Present value of comparable property + adjustment for lot size + adjustment for effective age + adjustment for living area
= $ 292,740+ $750 - $1,000 - $8,370
= $284,120