An appraiser cites a market statistic without stating the geography it covers. What is the flaw?
Correct Answer
B) The reader cannot judge relevance to the subject
Without enough geographic context, an intended user may be unable to assess whether the statistic supports the subject-market conclusion. Identify material source, period, geography, property filters, and limitations. A broader-area statistic may still be useful when its applicability and limitations are explained; it need not always match an identical boundary. The flaw is missing analytical context, not a ban on statistics or an automatic change in confidentiality.
Why This Is the Correct Answer
Option B is correct because, without the geography, the reader cannot judge the statistic's relevance to the subject. A reader should be able to understand the risk characteristics of the subject property and its market. Identifying material source, period, geography, filters and limitations lets intended users assess whether the statistic supports the conclusion.
Why the Other Options Are Wrong
Option A: Statistics may not be cited in appraisal reports
Option A says statistics may not be cited in appraisal reports. Market statistics can be cited; the problem here is the missing geographic context.
Option C: The statistic becomes confidential information
Option C says the statistic becomes confidential information. Omitting the geography does not change the confidentiality status of a market statistic.
Option D: Geography affects only commercial property values
Option D says geography affects only commercial property values. Location and market area matter for residential properties too, so geographic context is relevant regardless of property type.
Where, when and what
A market statistic needs its where (geography), when (period) and what (property filters) for the reader to judge it.
How to use: Use this checklist when evaluating any statistic cited in a report.
Exam Tip
When a report flaw involves missing information, the best answer usually concerns the reader's ability to understand and assess relevance.
Common Mistakes to Avoid
- -Citing statistics without stating their geography or period
- -Assuming a broader-area statistic is useless
- -Thinking market area matters only for commercial property
Concept Deep Dive
Analysis
This question tests why context matters when citing market statistics. If the report omits the geography a statistic covers, the reader cannot judge whether it applies to the subject's market. The flaw is missing analytical context, not a ban on statistics.
Background Knowledge
Market analysis relies on statistics such as median prices, days on market and inventory. Their usefulness depends on whether they describe the subject's competitive market. A broader-area statistic may still help when its applicability and limitations are explained.
Real-World Application
A report states that prices rose eight percent last year without saying whether that figure covers the county, the city or the subject's subdivision. A reviewer asks the appraiser to identify the area and explain how it relates to the subject's market.
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