An appraiser reports a regression result without stating the sample size. What is the problem?
Correct Answer
D) The reader cannot judge how much weight it deserves
Why this is correct: The reader cannot judge how much weight it deserves. The governing concept is transparency and sufficiency. Sample size (n) is critical for assessing reliability; a coefficient from 15 sales is less reliable than one from 300 sales. Omitting it prevents the reader from evaluating the analysis's strength. Why the other choices are wrong: Sample size determines the value conclusion directly is an overstatement; it influences reliability but doesn't directly determine value. USPAP prescribes a minimum number of observations is wrong; USPAP does not set fixed minimums for regression. Sample size is needed to compute the intercept term is technically true for calculation, but the core issue is disclosure for reader understanding. Exam tip: Always report sample size, data period, and market area when presenting regression results to allow proper evaluation.
Why This Is the Correct Answer
Why this is correct: The reader cannot judge how much weight it deserves. The governing concept is transparency and sufficiency. Sample size (n) is critical for assessing reliability; a coefficient from 15 sales is less reliable than one from 300 sales. Omitting it prevents the reader from evaluating the analysis's strength. Why the other choices are wrong: Sample size determines the value conclusion directly is an overstatement; it influences reliability but doesn't directly determine value. USPAP prescribes a minimum number of observations is wrong; USPAP does not set fixed minimums for regression. Sample size is needed to compute the intercept term is technically true for calculation, but the core issue is disclosure for reader understanding. Exam tip: Always report sample size, data period, and market area when presenting regression results to allow proper evaluation.
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