An estate sale closed quickly at a price below the neighborhood's range, with the executor under a court timeline. The appropriate treatment is:
Correct Answer
A) Adjust for conditions of sale, or exclude it with explanation
Why this is correct: An estate sale under court timeline involves a compelled seller, which may not reflect typical market motivation. If the discount is measurable, adjust; if not, exclude the sale and explain why. Why the other choices are wrong: Use it as the primary comparable, being the most recent transaction is wrong; recency doesn't override atypical conditions. Average it with the other sales to smooth out its influence buries the problem. Report it without comment, since the sale price is public record fails to address atypical conditions. Exam tip: Always analyze conditions of sale; don't mix motivated and unmotivated transactions.
Why This Is the Correct Answer
Option A captures both legitimate paths and, importantly, requires an explanation either way. Adjusting is appropriate when the amount of the duress discount can be supported by market evidence rather than judgment alone. Excluding is appropriate when it cannot, because an unmeasurable adjustment is not more credible than no comparable at all. Either choice is defensible as long as the reasoning appears in the report, which is what allows a reader to follow the analysis.
Why the Other Options Are Wrong
Option B: Use it as the primary comparable, being the most recent transaction
Recency is only one element of comparison and it does not outrank conditions of sale. A sale that closed last week under a compelled timeline is less indicative of market value than an older sale between typically motivated parties, and promoting it to primary comparable gives greatest weight to the least reliable data point. The option treats date of sale as a trump card rather than one adjustment among several.
Option C: Average it with the other sales to smooth out its influence
Averaging spreads the duress discount across the entire indication instead of isolating and removing it, so the distortion is hidden rather than corrected. The sales comparison approach reconciles adjusted indications by judgment about comparability, not by arithmetic mean, and a simple average also gives the flawed sale equal weight with sound ones. The option substitutes a mathematical smoothing for the required analysis.
Option D: Report it without comment, since the sale price is public record
Being in the public record establishes that the transaction occurred and at what price; it says nothing about the motivation behind it. Verification exists precisely to learn the circumstances that a recorded price cannot show, and a court-driven timeline is exactly the kind of circumstance verification is meant to surface. Reporting the price without comment omits the fact that determines how much weight the sale deserves.
Willing Or Made To
For every comparable ask whether the seller was willing or was made to sell. A court calendar, a divorce decree, a foreclosure, or a relocation deadline all mean made to, and that is a conditions of sale problem. Measure it if the market lets you, drop the sale if it does not, and say which you did.
How to use: When a stem describes an unusual seller circumstance and offers four treatments, look for the choice that both handles the defect and requires disclosure. Reject anything that averages, ignores, or elevates the distressed sale.
Exam Tip
Apply transactional adjustments in order before any physical adjustments, because a conditions of sale problem contaminates every later adjustment made off that price.
Common Mistakes to Avoid
- -Assuming an arm's length sale between unrelated parties cannot involve duress
- -Guessing at a duress adjustment percentage without any market support for it
- -Dropping an outlier silently rather than explaining why it was excluded
Concept Deep Dive
Analysis
This item tests conditions of sale, one of the standard elements of comparison and one of the transactional adjustments that must be made before any property adjustments are considered. The definition of market value assumes a willing buyer and a willing seller, each typically motivated and neither under duress, and an executor selling against a court deadline is by definition not typically motivated. That atypical motivation is the specific defect the appraiser must confront; it is not cured by the sale being recent, arm's length in form, or a matter of public record. The correct response has two acceptable branches: if the market supplies enough evidence to measure the discount, such as a resale of the same property or a set of comparable estate sales, the appraiser adjusts for conditions of sale; if the discount cannot be measured credibly, the appraiser excludes the sale and explains why. What is never acceptable is leaving an unexplained outlier in the grid to drag the indication down.
Background Knowledge
You need to know the market value definition's assumption of a willing, typically motivated buyer and seller, and the list of elements of comparison with the transactional adjustments applied first in sequence: property rights conveyed, financing terms, conditions of sale, expenditures made immediately after purchase, and market conditions. You should know that conditions of sale covers duress, foreclosure, estate and court-ordered sales, related-party transactions, and assemblage motivation. You also need to know that sale verification with a party to the transaction is how these circumstances are discovered.
Real-World Application
Verifying a sale for a residential assignment, the appraiser learns from the listing agent that the executor accepted a below-market cash offer to close before a probate hearing. Lacking a measurable pattern in other estate sales, the appraiser excludes the transaction from the grid and states in the report that it was analyzed, found to involve atypical seller motivation, and set aside for that reason.
More Sales Comparison Questions
Excess land differs from surplus land in that excess land:
A paired sales analysis reveals that homes with stainless-steel appliances sell for $2,100 more than identical homes with standard appliances — but only when the homes are priced below $350,000. In the subject’s neighborhood, median sale price is $410,000. What is the appraiser’s obligation regarding the $2,100 appliance adjustment?
GLA differs by 210 sq ft between subject and comparable. Paired sales support $65 per sq ft of living area. The line adjustment is:
Paired sales are drawn from transactions six months apart in a stable market. The time adjustment needed is:
The most appropriate unit of comparison is determined by:
A comparable superior to the subject in every adjusted category should produce an indication that is:
Three sales support $520,000; the borrower's purchase contract is $505,000. May the appraisal conclude above the contract price?
A comparable sold for $300,000 with the seller carrying a loan 2 points below market, a benefit worth $8,000. What is its cash-equivalent price?
Why is a foreclosure sale generally a poor comparable in a stable market?
A comparable sold 8 months ago for $250,000 in a market appreciating 6% per year. What is the time-adjusted price?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam