Under OCC 12 CFR 34.42(g), which is not a required market-value condition?
Correct Answer
B) Completion within a universal thirty-day deadline
The specified OCC market-value definition assumes reasonable market exposure, informed parties and typical motivation without a universal thirty-day disposal deadline. A forced deadline can change the transaction premise and is not automatically a market-value requirement.
Why This Is the Correct Answer
Option B is correct because the regulatory market value definition contains no universal thirty-day deadline. It assumes a competitive and open market, prudent and knowledgeable parties, and a price not affected by undue stimulus. A forced short deadline would describe a different, compelled-sale premise rather than market value.
Why the Other Options Are Wrong
Option A: Reasonable open-market exposure
Option A, reasonable open-market exposure, is part of the definition, which requires a reasonable time for exposure in the open market. Because it is a required condition, it is not the answer to a question asking what is not required.
Option C: Typically motivated parties
Option C, typically motivated parties, is part of the definition, which describes buyer and seller as typically motivated. It is a required condition, so it does not answer this question.
Option D: Well-informed or well-advised buyer and seller parties
Option D, well-informed or well-advised parties, is part of the definition, which requires that both parties be well informed or well advised and acting in what they consider their best interests. It is a required condition, so it is not the exception.
Fair Sale, No Fire Sale
Market value assumes a fair, open sale with time to expose the property; a short forced deadline belongs to a fire sale, not market value.
How to use: Use this to spot deadline-driven choices in market value definition questions.
Exam Tip
In a NOT question, check each choice against the definition and pick the one that conflicts with an open, competitive market.
Common Mistakes to Avoid
- -Confusing market value with liquidation value
- -Overlooking that the definition includes reasonable market exposure
- -Picking a required condition in a NOT question
Concept Deep Dive
Analysis
This question asks which item is not part of the regulatory market value definition. The definition describes the most probable price in a competitive and open market under conditions requisite to a fair sale, with prudent, knowledgeable parties and no undue stimulus. Reasonable exposure, typical motivation and informed parties are part of that definition; a universal thirty-day completion deadline is not.
Background Knowledge
The federal banking agencies' market value definition sets out conditions such as consummation as of a specified date, typical motivation, informed parties, reasonable exposure time, payment in cash or comparable terms, and a price unaffected by special financing or sales concessions. Valuations under a compressed sale period, such as liquidation value, use a different premise.
Real-World Application
A lender asks an appraiser for market value on a property the owner must sell within a month. The appraiser explains that market value assumes reasonable exposure and that a value under a forced short sale period would be a different value type.
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