A repeat-sale pair spans a market peak: bought $400,000, sold $400,000 four years later. Concluding 'no market movement' from this pair alone errs because:
Correct Answer
D) The pair hides the rise and fall in between
The two sales establish a net price change between those dates, subject to comparable-condition verification. They do not reveal the intervening path, which could rise then fall. Use additional time-relevant data rather than treating equal endpoints as proof of no interim market movement.
Why This Is the Correct Answer
Option D is correct because a repeat-sale pair shows only the net price change between its two dates, subject to verifying comparable condition. It cannot reveal the intervening path, which here could have risen and then fallen across the peak, so additional time-relevant data is needed.
Why the Other Options Are Wrong
Option A: Repeat sales are inherently unreliable
Option A says repeat sales are inherently unreliable. Repeat sales can be useful evidence of net change when condition is verified; the problem here is that one pair cannot show the path between its endpoints.
Option B: The equal prices prove the market rose
Option B says the equal prices prove the market rose. Equal endpoint prices show no net change between those dates and do not prove a rise.
Option C: Renovation spending explains flat resale prices
Option C says renovation spending explains flat resale prices. Nothing in the facts mentions renovation, and renovation would tend to raise the later price rather than explain a flat result.
Two dots hide the curve
Two points show where a line starts and ends, but not the curve it took in between.
How to use: Use this image when a question draws a trend conclusion from just two observations.
Exam Tip
When a question highlights a peak or cycle within a period, look for the answer about what the endpoints cannot show.
Common Mistakes to Avoid
- -Treating equal endpoint prices as proof of a flat market throughout
- -Rejecting repeat sales entirely instead of recognizing their limits
- -Assuming a cause for the price pattern without evidence
Concept Deep Dive
Analysis
This question tests the limits of a single repeat-sale pair. Two sales show the net change between their dates, but not what happened in between. When the period spans a market peak, equal prices can hide a rise followed by a fall.
Background Knowledge
Paired and repeat sales are used to estimate market conditions adjustments, but each pair measures change only between its two dates. Market cycles can include rises and falls within that span. Appraisers support time adjustments with multiple data points that cover the relevant period.
Real-World Application
An appraiser finds a home that sold for the same price four years apart and is tempted to report no market change. Reviewing quarterly median prices for the area, she sees values rose sharply and then declined, so she uses the more detailed data for her time adjustment.
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