PSI Virginia Real Estate Practice Exam

When adjusting comparables, what should be done if a comparable is better than the subject property?

1. Add to the comp value

2. Deduct from the comp value

3. No adjustments needed

4. Apply a fixed percentage increase

The correct answer is: Deduct from the comp value

When adjusting comparables, if a comparable property is better than the subject property, the appropriate action is to deduct from the comp value. This adjustment reflects the fact that the superior features of the comparable property would not apply to the subject property, which is presumed to be of lesser value due to these deficiencies. For instance, if a comparable property has a larger square footage, more recent updates, or better location attributes, these enhancements increase its market value in comparison to the subject. To equalize these values for an accurate comparison, the appraiser would reduce the value of the superior comparable by a calculated amount reflective of those better features. Essentially, this process aligns the values to ensure that the comparison is fair and accurate, facilitating a more precise market analysis and valuation of the subject property. This method helps in achieving an objective appraisal that accurately represents the worth of the subject property based on market conditions and comparable sales data.