65. 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.
The valuation of the ranch house can be estimated by starting with the sale price of the similar house next door, which is $138,000. Given that a two-car garage adds approximately $10,000 in value, the expected selling price for the ranch house would be $138,000 + $10,000, totaling $148,000. However, since buyers typically value a deck at only $500, this suggests that the garage value is more significant, thus affirming that the ranch house is most likely to sell for around $147,500, considering rounding and buyer behavior.
A) $123,500
This option is incorrect as it undervalues the ranch house significantly. It does not account for the additional $10,000 value provided by the garage and fails to reflect the market value of comparable properties in the area.
B) $128,500
This option is also incorrect. While it is an increase over the house next door, it does not adequately reflect the value of the garage addition, which is estimated to be worth $10,000. Thus, it falls short of the expected selling price based on market data.
C) $147,500
This option is the most accurate estimate for the ranch house's selling price. By adding the $10,000 value of the garage to the $138,000 price of the similar house, it results in a valuation of $148,000. Accounting for potential buyer negotiations or market conditions, $147,500 is a reasonable and likely sale price.
D) $148,500
This option slightly overestimates the selling price of the ranch house. While it correctly considers the value of the garage, it does not account for the small adjustment that might occur in negotiations or buyer preferences, making $147,500 a more realistic estimate.
Conclusion
The correct answer, $147,500, reflects the market value of the ranch house when considering the added value of the garage and the lower value assigned to the deck. All other options either undervalue the property or miscalculate the appropriate adjustments based on comparable sales, making them less accurate in this scenario.