In a market-value assignment, the subject’s current listing is available in the normal course of business. Why must it be analyzed?
Correct Answer
B) It is market evidence about the subject itself
SR 1-5(a) requires analysis of available subject agreements of sale, options and listings current as of the effective date when developing market value. A listing supplies evidence about asking price, exposure and market response, but does not automatically set a ceiling or determine value. Investigate and explain material inconsistencies with other evidence. Separate lender or investor eligibility conditions can apply; USPAP’s analysis duty does not guarantee every listed-property loan is eligible.
Why This Is the Correct Answer
Option B is correct because a current listing of the subject is market evidence about the subject itself, such as its asking price, exposure and market response. SR 1-5(a) requires analysis of agreements of sale, options and listings current as of the effective date when developing market value.
Why the Other Options Are Wrong
Option A: Listings determine the value conclusion
Option A is wrong because listings do not determine the value conclusion. A listing is one piece of evidence the appraiser weighs with other data.
Option C: Standards require listing prices be adopted
Option C is wrong because the standards do not require listing prices to be adopted. They require the listing to be analyzed, not accepted as value.
Option D: Lenders will not accept unlisted properties
Option D is wrong because the reason for the analysis is not that lenders will not accept unlisted properties. The requirement comes from USPAP's market value development rules, and lender eligibility rules are separate.
Listing informs, not decides
The subject's listing is a clue about its market, not the answer to its value.
How to use: Use this when a question asks how a subject's listing affects the appraisal.
Exam Tip
Reject answers that make a listing price a ceiling, floor or required value.
Common Mistakes to Avoid
- -Treating the listing price as the value
- -Ignoring the subject's current listing
- -Confusing USPAP duties with lender eligibility rules
Concept Deep Dive
Analysis
This question tests why SR 1-5(a) requires analysis of a subject's current listing. A listing is market evidence about the subject itself, but it informs rather than dictates the value conclusion.
Background Knowledge
Asking prices often differ from sale prices, and a long time on market or price cuts can signal market resistance. The appraiser reconciles listing evidence with sales and other data and explains material inconsistencies.
Real-World Application
A house has been listed for 120 days with two price reductions. The appraiser analyzes the listing history as evidence of market response and reconciles it with recent comparable sales.
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