A ranch house with a double garage is being valued. The house next door, which is similar except that it lacks a garage and has an outside deck, was sold last month for $138,000. Experience in that area shows that a two-car garage is probably worth $10,000 to buyers, while in general, they will pay only $500 extra for a deck. The ranch house is most likely to sell for around

Rationale

The ranch house is most likely to sell for around $147,500.

Given that the comparable house sold for $138,000, we can adjust this value based on the additional features of the ranch house. The double garage adds an estimated value of $10,000, while the absence of a deck on the ranch house means we do not subtract anything for that feature. Thus, the calculation is $138,000 + $10,000 = $148,000.

A (123,500) YOUR ANSWER

This option underestimates the value of the ranch house by deducting too much from the comparable sale price. It fails to account for the significant value added by the two-car garage, which is worth around $10,000, leading to a gross undervaluation.

B (128,500) YOUR ANSWER

This choice also significantly undervalues the property. It incorrectly suggests a decrease of $9,500 from the sale price of the comparable house, which does not take into consideration the increase in value due to the garage.

C (147,500) CORRECT

This amount closely aligns with the calculations based on the comparable property. However, it falls short by not fully accounting for the garage's value. The correct calculation should reflect a selling price of $148,000, indicating that this answer is slightly low.

D (148,500) YOUR ANSWER

This option overestimates the value by adding an extra $500 beyond the calculated price of $148,000. While it acknowledges the garage's value, it inaccurately includes an additional amount that does not correlate with the adjustments made for the features of the properties.

Conclusion

The most logical estimate for the ranch house's selling price is $148,000, derived from the comparable sale price adjusted for the value of the garage. While option C is close, the accurate adjustment points to $148,000, making option D the nearest correct answer for practical purposes despite its slight overvaluation. Thus, understanding property features and their monetary implications is critical in real estate evaluations.

The ranch house is most likely to sell for around $147,500.

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