Tennessee Realtor State Practice Exam

In the sales comparison approach, how are adjustments made when a comparable is missing a feature found in the subject property?

1. Adjust downwards

2. No adjustments are made

3. Adjust upwards

4. Adjust sideways

The correct answer is: Adjust upwards

In the sales comparison approach, when a comparable property lacks a feature that is present in the subject property, adjustments are made upward. This is because the absence of a feature in the comparable means that its value is less than that of the subject property. Therefore, to arrive at a more accurate comparison, the value of the comparable must be adjusted upward to reflect the added value of the feature that the subject property has. This ensures that when appraising or pricing the subject property, it more accurately reflects the market value by compensating for the comparative advantage offered by the feature present in the subject property. For example, if the subject property has a swimming pool but the comparable property does not, the appraiser would adjust the value of the comparable property upward to account for the pool. This approach enables an effective comparison and helps accurately assess the market value of the subject property in context.