How do multiple downward adjustments behave in the adjustment process?

• A. They cancel each other out.
• B. They should be applied in any order.
• C. They compound sequentially, reducing the price each time.
• D. Only the first downward adjustment matters.

Answer: (C)

When applying multiple downward adjustments, each adjustment is taken from the current value, so they accumulate as you go. The price you start with is adjusted for one difference, and the next adjustment then affects that already-adjusted amount, not the original price. This creates a compounding effect.

For example, start with a comparable at 200,000. A downward adjustment for location of 5% reduces it to 190,000. A subsequent downward adjustment for condition of 3% then applies to 190,000, bringing it to 184,300. That final figure is a result of multiplying the two adjustments (0.95 × 0.97), not simply subtracting 8% at once (which would give 184,000). This shows how downward adjustments compound and reduce the price each time. They don’t cancel each other out, and you don’t ignore later adjustments after applying the first.