A market value definition typically describes the price as the:
Correct Answer
D) Most probable price under competitive and open market conditions
Why this is correct: Market value is defined as the most probable price a property should bring in a competitive, open market under all conditions requisite to a fair sale, with buyer and seller acting prudently and knowledgeably. Why the other choices are wrong: "Highest figure any single motivated buyer would pay" describes investment value. "Average of all closed sale prices" is a statistical measure, not a defined market value. "Amount the current owner originally paid, adjusted for inflation" is cost-based, not market-based. Exam tip: Market value is a 'most probable' price, not a maximum, minimum, or average.
Why This Is the Correct Answer
Why this is correct: Market value is defined as the most probable price a property should bring in a competitive, open market under all conditions requisite to a fair sale, with buyer and seller acting prudently and knowledgeably. Why the other choices are wrong: "Highest figure any single motivated buyer would pay" describes investment value. "Average of all closed sale prices" is a statistical measure, not a defined market value. "Amount the current owner originally paid, adjusted for inflation" is cost-based, not market-based. Exam tip: Market value is a 'most probable' price, not a maximum, minimum, or average.
More USPAP Questions
Which type of appraisal report may contain the appraiser's analyses, opinions, and conclusions but is intended for use by the client only?
How long must an appraiser retain the workfile for an appraisal assignment under USPAP?
If an appraiser uses a hypothetical condition that the subject property is 10% larger than it actually is, this must be:
Under Standard 1, when developing a real property appraisal, an appraiser must:
An appraiser accepts an assignment to appraise a specialized industrial property but has never appraised this property type before. To comply with the Competency Rule, the appraiser:
According to the Scope of Work Rule, the scope of work must be appropriate to the:
According to Standard 1, when developing an opinion of market value, an appraiser must analyze:
A lender emails: 'We need at least $450,000 to make this loan work — can you take the assignment?' Accepting on that basis is:
An appraiser is developing an opinion of market value for a 20-unit apartment building. The appraiser finds three comparable sales with the following information: Sale 1: 18 units, sold for $1,800,000; Sale 2: 22 units, sold for $2,200,000; Sale 3: 24 units, sold for $2,280,000. What is the average price per unit for these comparables?
In developing a scope of work, an appraiser must consider all of the following factors EXCEPT:
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