75. 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, the addition of a two-car garage adds approximately $10,000 to the value, while the absence of a deck, which only adds $500, suggests that the ranch house will be priced significantly higher than the neighbor's house.
A) 123,500
This option is incorrect as it significantly undervalues the ranch house. Given the neighbor's sale price of $138,000 and the value attributed to the garage, the ranch house should be priced well above this amount.
B) 128,500
This option is also incorrect, as it still does not take into account the full value of the two-car garage. While it is slightly higher than the previous option, it fails to reflect the $10,000 increase attributed to the garage.
C) 147,500
This option is correct. The ranch house, valued at $138,000, would increase to $148,000 with the addition of the garage, and the small deduction for not having a deck ($500) results in a final estimated value of $147,500.
D) 148,500
This option is incorrect because it overestimates the value of the ranch house. While it accounts for the garage, it fails to adjust for the negligible value of the deck, leading to a figure that is too high.
Conclusion
Ultimately, the ranch house is best valued at $147,500, as it accurately reflects the added value of the garage while accounting for the minor deduction due to the absence of a deck. Options A and B undervalue the property, while D misrepresents the valuation by not considering the deck's minimal impact.