Explain the role of comps in appraisal and how adjustments are made.

• A. Comps are similar property sales used to estimate value; adjustments account for differences in features, condition, and location to derive value.
• B. Comps are the property's neighborhood crime stats used to determine risk.
• C. Comps are the lender’s collateral evaluation methods.
• D. Comps are a list of comparable lenders in the market.

Answer: (B)

Comps are comparable property sales used in the appraisal process to anchor value in the market. An appraiser picks recent sales of similar properties in the same area to establish what buyers have actually paid. Because no two homes are identical, adjustments are made for differences in features, condition, and location. If the subject lacks a feature that a comp has, the comp’s price is adjusted downward to reflect that the subject would typically sell for less; if the subject has an advantage, the comp’s price is adjusted upward to reflect that extra value. These adjustments are guided by market data and reflect typical values for those features, applied until the comps resemble the subject. After adjusting several comps, the appraiser reconciles the data to arrive at a final estimated value. This approach is focused on market-based comparisons, not crime statistics or lender-specific methods.