How does a 'market conditions' adjustment differ from a 'conditions of sale' adjustment?
Correct Answer
B) One captures price-level change over time; the other, atypical motivation in a deal
Why this is correct: A 'market conditions' adjustment (or time adjustment) accounts for changes in the overall market price level between the sale date of the comparable and the appraisal's effective date. A 'conditions of sale' adjustment accounts for atypical motivations or relationships in a specific transaction (e.g., a foreclosure, sale between relatives). Why the other choices are wrong: They are not interchangeable names; they address fundamentally different influences. Market conditions adjustments apply in both rising and declining markets. Conditions of sale adjustments apply to any transaction with atypical motivations, not just foreclosures. Exam tip: Market conditions = When? (Time). Conditions of sale = Who/Why? (Parties).
Why This Is the Correct Answer
Why this is correct: A 'market conditions' adjustment (or time adjustment) accounts for changes in the overall market price level between the sale date of the comparable and the appraisal's effective date. A 'conditions of sale' adjustment accounts for atypical motivations or relationships in a specific transaction (e.g., a foreclosure, sale between relatives). Why the other choices are wrong: They are not interchangeable names; they address fundamentally different influences. Market conditions adjustments apply in both rising and declining markets. Conditions of sale adjustments apply to any transaction with atypical motivations, not just foreclosures. Exam tip: Market conditions = When? (Time). Conditions of sale = Who/Why? (Parties).
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Previous Question
An appraiser uses paired sales analysis to estimate an adjustment for a 3-car garage versus a 2-car garage. Four valid pairs are identified, each controlling for age, condition, and location. The observed price premiums are: $11,200, $13,800, $9,400, and $14,600. The appraiser excludes the $9,400 observation because it involved a property with unusually high custom finishes that likely inflated the garage premium beyond typical market reaction. What is the resulting paired-sales adjustment, rounded to the nearest $100, and which USPAP provision justifies the exclusion?
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A sale between a corporation and its subsidiary at book value is: