Why analyze and report relevant prior subject sales and transfers?
Correct Answer
A) To evaluate transaction evidence, not to treat a past price as value
Subject transfer history supplies transaction evidence to analyze and explain in relation to the value opinion. It is distinct from disclosure of the appraiser’s prior services, which concerns independence and certification. A past price alone does not establish current market value.
Why This Is the Correct Answer
Option A is correct because USPAP requires analysis of subject sales and transfers within the three years before the effective date so the appraiser can evaluate that transaction evidence in relation to the value opinion. A price is only the amount asked, offered or paid. A past price alone does not establish current market value, so it must be analyzed rather than adopted.
Why the Other Options Are Wrong
Option B: Mainly to disclose which prior services the appraiser has performed
Option B is wrong because disclosing which prior services the appraiser has performed is a separate certification and independence matter, not the purpose of analyzing the subject's transfer history.
Option C: To substitute for identifying the legal interest being appraised
Option C is wrong because transfer history does not substitute for identifying the legal interest being appraised; the real property interest must still be identified.
Option D: To set the current opinion equal to the last sale price
Option D is wrong because setting the current opinion equal to the last sale price treats price as value; a past price must be analyzed, and market conditions and terms may have changed.
Price is evidence, not value
A prior sale is a clue to analyze, not an answer to copy. Price is what was paid; value is what you conclude.
How to use: Use this when a question asks why prior subject sales are analyzed.
Exam Tip
Separate analysis of the subject's sales history from the appraiser's prior-services disclosure; they serve different purposes.
Common Mistakes to Avoid
- -Adopting the last sale price as current value
- -Confusing subject sales history with prior-services disclosure
- -Skipping analysis of non-arm's-length transfers
Concept Deep Dive
Analysis
This question tests the purpose of analyzing the subject's prior sales and transfers. Those transfers are market evidence to evaluate, not a shortcut to value. Separate this requirement from the appraiser's disclosure of prior services and from identifying the property interest.
Background Knowledge
USPAP requires analysis of sales and other transfers of the subject that occurred within the three years before the effective date. USPAP defines price as the amount asked, offered or paid, which differs from value. Prior transfers can reveal market trends, atypical terms or related-party deals that need explanation.
Real-World Application
A subject sold 18 months ago to a relative at a price well below nearby sales. The appraiser analyzes the transfer, notes the related-party terms, and explains why that price does not indicate current market value.
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