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.
By considering the value adjustments for the double garage and the absence of the deck, the ranch house is estimated to sell for approximately $147,500.
A) $123,500
This option is incorrect because it undervalues the ranch house significantly. With a garage valued at $10,000 and the similar house selling for $138,000, a valuation this low does not account for the added value of the garage and suggests a misunderstanding of the market adjustments.
B) $128,500
This option is also incorrect, as it does not adequately reflect the contribution of the garage to the property's value. After adding the $10,000 for the garage to the price of the comparable house, the value would still exceed this amount, indicating that this option underestimates the value of the ranch house.
C) $147,500
This option is correct. By taking the last sale price of $138,000 and adding the $10,000 value for the garage while subtracting the $500 that buyers would pay for the deck, the calculation results in $138,000 + $10,000 - $500 = $147,500. This accurately reflects the market's valuation of the ranch house.
D) $148,500
This option is incorrect as it slightly overestimates the value of the ranch house. While it recognizes the garage's value, it fails to consider the minimal impact of the deck's absence, leading to a valuation that does not align with the given market data.
Conclusion
The correct answer, $147,500, is derived from a logical adjustment of the sale price of the comparable house, factoring in the garage's higher value and the minimal detriment of not having a deck. All other options either undervalue or overvalue the ranch house based on the provided market insights, confirming that option C is the most accurate representation of its value.