A comparable's sale date, price, and physical characteristics come from public records, but its condition at sale is unknown. The appraiser should:
Correct Answer
B) Attempt verification and note any remaining uncertainty
Why this is correct: The correct answer, 'Attempt verification and note any remaining uncertainty,' is the proper procedure. Condition is a critical factor influencing price. The appraiser must make a reasonable effort to verify it (e.g., contacting parties, reviewing listing photos). If uncertainty remains, it must be disclosed so the user can assess the comparable's reliability. Why the other choices are wrong: 'Assume the comparable's condition matched the subject's' is wrong; assumptions without verification are improper. 'Assign an average condition adjustment' is wrong; an adjustment without verification is unsupported. 'Use the sale without further comment' is wrong; failing to note a key unknown is misleading. Exam tip: For any critical data point not in public records (like condition, concessions), 'attempt to verify and disclose' is the standard procedure.
Why This Is the Correct Answer
Attempting verification and then disclosing any residual uncertainty is a two-part answer that matches the two-part obligation: make a reasonable effort to obtain the data, and report honestly about what remains unknown. Disclosure lets an intended user judge how much weight the comparable deserves, which is a judgment they cannot make if the gap is hidden. The appraiser may still use the sale, perhaps with less weight in reconciliation. If the unknown is significant and cannot be resolved, an appropriately disclosed extraordinary assumption is the formal device, and its use must be stated prominently.
Why the Other Options Are Wrong
Option A: Assume the comparable's condition matched the subject's
Assuming the comparable matched the subject's condition conveniently zeroes out the adjustment the appraiser was unable to support, which biases the result toward whatever the subject happens to be. Assumptions of this kind require a reasonable basis and disclosure, and here there is neither. It is the least visible of the wrong answers, which is what makes it the most dangerous in practice.
Option C: Assign an average condition adjustment
An average condition adjustment is a number with no market behind it, and every adjustment must be supported by evidence. Averaging also hides the real problem, which is missing information rather than an unmeasured difference. Fabricating a defensible-looking figure is worse than disclosing a gap, because it looks supported when it is not.
Option D: Use the sale without further comment
Using the sale silently deprives intended users of a material limitation on the analysis, which is the kind of omission that renders a report misleading. Verification and disclosure are affirmative obligations, not optional courtesies. Silence is the choice that converts a data limitation into an ethics problem.
Try, Then Tell
Two steps in fixed order. Try: make a reasonable effort to verify from a party or a reliable source. Tell: disclose whatever you could not resolve. Never skip to a number that papers over the gap.
How to use: In any missing-data item, look for the option containing both a verification effort and a disclosure. Eliminate options that assume, average, or proceed silently.
Exam Tip
Listing photographs are the single most useful condition-verification source for a past sale, and exams often reward answers that mention checking the listing record rather than only calling parties.
Common Mistakes to Avoid
- -Treating assessor records as verification of condition
- -Filling a data gap with an assumption instead of disclosing it
- -Failing to describe the extent of data research and verification in the report
Concept Deep Dive
Analysis
Public records are reliable for what they are designed to capture, chiefly the transfer, the date, the recited consideration, and assessor-recorded physical characteristics. They are silent about the things that most often move price: condition at the time of sale, concessions, motivation, and whether the property was exposed to the market. USPAP's development requirements direct the appraiser to collect, verify, and analyze the information necessary for credible results, and verification means going to a party to the transaction or to a reliable secondary source rather than accepting a record at face value. For condition specifically, the workable sources are listing photographs and remarks, the listing or selling agent, the buyer or seller, an exterior observation of the property, and permit records. When verification effort still leaves a gap, the answer is not to invent a number but to disclose the limitation so intended users can weigh the comparable accordingly.
Background Knowledge
You need the requirement to collect, verify, and analyze comparable data, and the practical hierarchy of verification sources from a party to the transaction down to secondary records. You should also know the definition and disclosure requirements of an extraordinary assumption, and that the report must describe the extent of the appraiser's data research.
Real-World Application
An appraiser cannot reach either agent on a six-month-old sale, so she pulls the archived listing photographs and remarks, confirms the kitchen was updated before the sale, notes in the report that condition was verified from listing media rather than a party to the transaction, and gives the sale slightly less weight in reconciliation.
More Sales Comparison Questions
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