When developing market value, what subject transfer period does SR 1-5(b) cover when the information is available in the normal course of business?
Correct Answer
C) The three years preceding the appraisal effective date
When developing market value and normally available, analyze all sales and other transfers within three years before the effective date under SR 1-5(b). The period is not measured from the report date, and this development duty is not a universal transaction-history rule for every possible value type.
Why This Is the Correct Answer
Option C is correct because SR 1-5(b) requires analysis of all sales and other transfers of the subject that occurred within the three years prior to the effective date of the appraisal. The period is three years and is measured from the effective date, not the report date.
Why the Other Options Are Wrong
Option A: The twelve months before the date of the report
Option A is wrong because twelve months before the date of the report gets both the length and the anchor wrong. The rule covers three years and runs from the effective date.
Option B: The entire ownership history of the subject
Option B is wrong because the entire ownership history of the subject goes beyond what SR 1-5(b) requires. The development duty covers transfers within three years before the effective date.
Option D: The most recent transfer of the subject, at any date
Option D is wrong because the most recent transfer at any date is neither the required period nor complete. The rule covers all sales and other transfers within the three years before the effective date, which may be more than one transfer or none.
Three years back from effective
The subject's sales history runs three years back from the effective date, not from the report date.
How to use: Use this to reject answers using twelve months, any date or the report date.
Exam Tip
Check both the length and the anchor date; distractors often change one of them.
Common Mistakes to Avoid
- -Using one year instead of three
- -Measuring from the report date instead of the effective date
- -Analyzing only the most recent transfer
Concept Deep Dive
Analysis
This question tests the SR 1-5(b) sales-history period. When developing market value and the information is available in the normal course of business, the appraiser analyzes all sales and other transfers of the subject within three years before the effective date. Focus on both the length and the anchor date.
Background Knowledge
SR 1-5 applies when developing market value and the information is available in the normal course of business. It covers current agreements of sale, options and listings, plus the three-year sales and transfer history. Prior transfers can reveal market trends, motivations or changes to the property that bear on value.
Real-World Application
An appraiser values a home as of June 1 and finds it sold 26 months earlier and again 8 months earlier at a much higher price. Both transfers are within three years of the effective date, so the appraiser analyzes them. The appraiser investigates whether renovations or market changes explain the price increase.
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