52. 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
Answer: C
The ranch house is most likely to sell for around $147,500.
Considering the value of the neighboring house at $138,000, we can assess the additional worth of the ranch house with a double garage. The garage adds approximately $10,000, while the absence of a deck, which is valued at $500, slightly reduces the overall value. Therefore, the expected selling price of the ranch house is $138,000 + $10,000 - $500, equating to $147,500.
A) $123,500
This option is incorrect as it significantly underestimates the value of the ranch house. Given the value of the neighboring house at $138,000 and the additional worth of a two-car garage, this figure does not account for the substantial increase in value due to the garage.
B) $128,500
This choice also fails to accurately reflect the value of the ranch house. While it is slightly higher than Option A, it still does not incorporate the full value of the double garage, resulting in a lower valuation than what is justified by the market.
C) $147,500
This is the correct answer as it accurately reflects the valuation of the ranch house based on the comparable sale of the neighboring house and the added value of the two-car garage. The calculation of $138,000 + $10,000 - $500 results in precisely $147,500.
D) $148,500
This option is incorrect because it overestimates the value of the ranch house. It adds too much to the base value of the neighboring house, failing to consider the minor reduction in value due to the absence of the deck.
Conclusion
The correct valuation of $147,500 for the ranch house takes into account the market value of the neighboring property adjusted for the additional features of the ranch house. Options A and B underestimate the value by not including the garage's worth, while Option D overestimates it by not correctly accounting for the absence of the deck. Thus, Option C is the most accurate reflection of the property's worth.