A relocating seller sought a 30 day close, marketed for two weeks and accepted 8% below the original asking price. What is the appropriate analytical response?
Correct Answer
B) Investigate market exposure, motivations, terms and any supported price effect
Investigate whether the motivation, exposure and transaction terms were typical for the relevant market and whether they affected price. Asking price is not necessarily market value. A relocation or 30 day closing goal alone does not prove duress, non-arm’s-length status or a required upward adjustment. Acceptance, adjustment or exclusion requires supported analysis.
Why This Is the Correct Answer
Option B is correct because the appraiser needs to determine whether the motivation, market exposure and terms were typical for the market and whether they affected price. Asking price is not necessarily market value, so accepting, adjusting or excluding the sale requires supported analysis.
Why the Other Options Are Wrong
Option A: A downward adjustment, since the quick sale is a superior transaction
Option A calls for a downward adjustment because the quick sale is a superior transaction. A seller's rush to sell, if it affected price at all, would tend to lower the price, and in any case the stem gives no evidence supporting a specific adjustment in either direction.
Option C: Assume no sale-condition effect because the sale closed at a negotiated price
Option C assumes no sale-condition effect because the sale closed at a negotiated price. A negotiated price does not rule out an effect from the seller's motivation or short exposure, so investigation is still needed.
Option D: Reject the sale outright because it sold below the original asking price
Option D rejects the sale outright because it sold below the original asking price. Asking prices often exceed final prices, and selling below asking does not by itself show the sale was not at market value.
Asking isn't value
List price is the seller's hope, and the sale price must be judged by exposure, motivation and terms, not by the gap from asking.
How to use: Use this when a stem stresses a discount from the original asking price.
Exam Tip
Favor answers that call for investigation of exposure and motivation over answers that reach a conclusion from a single fact.
Common Mistakes to Avoid
- -Treating any below-asking sale as a distressed sale
- -Assuming relocation automatically means duress
- -Ignoring motivation simply because the price was negotiated
Concept Deep Dive
Analysis
This question tests how to treat a sale with a possibly motivated seller. Facts such as relocation, a short close and a price below asking do not by themselves prove duress or set an adjustment; the appraiser investigates exposure, motivations and terms to see if price was affected.
Background Knowledge
Market value assumes typical motivation and reasonable exposure to the market. A willing seller is motivated to sell at the best terms available after proper marketing, so the appraiser examines whether a sale's circumstances departed from that standard and whether any departure affected price.
Real-World Application
A comparable's seller was relocating and wanted a 30 day close. The appraiser contacts the listing agent, learns the home drew several offers in two weeks, and compares the price with similar sales, finding no measurable discount from the seller's timing.
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