Property C is a small retail building with an energy-efficient HVAC system and a good highway location, which sold for $375,000. Property D has a standard HVAC system and an inferior location on a side street, which sold for $335,000. Analysis of other paired sales indicates that retail properties along highways sell for $30,000 more than properties on side streets. Assuming the subject has a good highway location and an energy-efficient HVAC system, what is the indicated HVAC adjustment to Property D?

• A. A negative $5,000 adjustment
• B. A positive $30,000 adjustment
• C. A positive $10,000 adjustment
• D. A negative $10,000 adjustment

Answer: (C)

In the sales comparison approach, you separate the value effects of differences between subject and comparables using observed paired-sales data. Here, the subject has a good highway location and an energy-efficient HVAC, while the comparable has an inferior location and a standard HVAC.

From paired sales, highway location carries about a 30,000 premium. The subject’s better location means we would add 30,000 to the comparable’s value to reflect that attribute.

The total price difference between the two properties is 375,000 − 335,000 = 40,000. Subtracting the 30,000 location premium leaves 10,000 attributable to the HVAC difference (energy-efficient vs standard).

Therefore, the indicated HVAC adjustment to the comparable is a positive 10,000.