Adjust the comparable sale to make it more like the subject property. For a feature with positive market value, add when the comparable is inferior and subtract when it is superior. After adjusting each sale, apply any weights the problem gives you.
The subject is the property being valued. A comparable is a property used for comparison. The examples and practice questions below are original exercises; their adjustment amounts and weights are supplied assumptions, not local market estimates.
Which property gets the adjustment?
| Comparison with the subject | Adjustment to comparable | Reason |
|---|---|---|
| Comparable lacks a valuable feature the subject has | Add | Estimate what the comparable would have sold for with that feature. |
| Comparable has a valuable feature the subject lacks | Subtract | Remove the value of the comparable's advantage. |
| No meaningful market-value difference for the feature | No adjustment | There is no stated difference to account for. |
A useful reminder is inferior comparable: add; superior comparable: subtract. Always finish the sentence “the comparable is inferior or superior to the subject.” Looking only at which house has the feature makes it easy to reverse the sign.
Example 1: Two adjustments on one sale
Given: A comparable sold for $310,000. The subject has a garage and the comparable does not; the problem assigns that difference a market value of $15,000. The comparable has a superior kitchen with a stated $8,000 advantage over the subject. All other factors are equal.
| Step | Amount |
|---|---|
| Comparable's actual sale price | $310,000 |
| Garage: comparable is inferior | + $15,000 |
| Kitchen: comparable is superior | − $8,000 |
| Adjusted indication for the subject | $317,000 |
The net adjustment is +$7,000. The $317,000 is an adjusted indication, not a change to what the comparable actually sold for and not automatically the final opinion of value.
Use contributory market value, not installation cost
If a pool cost $45,000 to install but the exercise supplies a supported $12,000 market contribution, use $12,000. For a comparable with that pool and a subject without one, subtract $12,000. A $325,000 sale would adjust to $313,000, assuming no other differences.
Real adjustments need market support. Fannie Mae's adjustment guidance calls for market-based adjustments rather than arbitrary rules of thumb. Do not invent a dollar amount from a property's description when the problem does not provide enough information.
Example 2: Apply the stated weights
Given: After all adjustments, the problem gives the following indications and weights.
| Comparable | Adjusted indication | Weight | Weighted contribution |
|---|---|---|---|
| A | $318,000 | 50% = 0.50 | $159,000 |
| B | $324,000 | 30% = 0.30 | $97,200 |
| C | $310,000 | 20% = 0.20 | $62,000 |
The weights total 100%. Add the contributions: $159,000 + $97,200 + $62,000 = $318,200.
Formula: sum of (adjusted indication × decimal weight). Do not divide this result by three. The percentage weights have already performed the averaging.
Weighted calculation and appraisal reconciliation
If an exercise instructs you to use percentage weights, perform that calculation. If it asks for a simple average, add the indications and divide by their count. Those instructions produce different methods.
In actual appraisal work, reconciliation involves evaluating the evidence and explaining which sales deserve more weight. It is not automatically an equal average or a fixed 50/30/20 formula. Fannie Mae's guidance requires an explanation for the weight assigned to the sales. These exercises teach the arithmetic once the weights are given.
A five-step check
- Identify the subject and each comparable.
- Start with the comparable's sale price.
- Write a separate signed adjustment for each stated difference.
- Calculate the adjusted indication for each comparable before weighting it.
- Check that weights total 100%, add the weighted contributions, and round only as instructed.
For positive weights totaling 100%, the weighted result should fall between the lowest and highest adjusted indications. A result outside that range signals an arithmetic or setup problem.
Try it yourself
- A comparable sold for $280,000. It lacks a garage that the subject has; the stated difference is worth $18,000. All else is equal. What is the adjusted indication?
- A comparable sold for $360,000. It has a pool worth $14,000 more than the subject's lack of a pool, but its condition is inferior by $9,000. What is the adjusted indication?
- Adjusted indications are $290,000, $300,000, and $310,000, weighted 20%, 50%, and 30%. What is the weighted result?
Answers and explanations
- $298,000. $280,000 + $18,000. The comparable is inferior, so add the missing feature's given value.
- $355,000. $360,000 − $14,000 + $9,000. Subtract its pool advantage and add for its condition disadvantage.
- $301,000. $58,000 + $150,000 + $93,000. A simple average of $300,000 would ignore the stated unequal weights.
Continue studying
Review CMA vs. Appraisal: What Is the Difference? and Real Estate Math: How to Choose the Right Formula. The sales-comparison arithmetic does not make a CMA and an appraisal interchangeable.
For help with a permitted practice question, submit a support request with the full question, the subject/comparable details, your signed adjustments, and the course unit or page.
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