A sales comparison approach is necessary for credible results. What does SR 1-4(a) require?
Correct Answer
C) Analyze available comparable-sales data to indicate a value conclusion
When the sales comparison approach is necessary for credible results, analyze the comparable sales data available to indicate a value conclusion. A shorter reporting option does not waive necessary development, and a cost estimate addresses a different approach. Evaluate suitability and reliability of the available evidence rather than assuming a fixed comparable count or universal six-month window.
Why This Is the Correct Answer
Option C is correct because SR 1-4(a) states that when a sales comparison approach is necessary for credible assignment results, the appraiser must analyze such comparable sales data as are available to indicate a value conclusion. The appraiser should evaluate the suitability and reliability of the available evidence rather than assume a fixed number of comparables.
Why the Other Options Are Wrong
Option A: Substitute estimated construction cost for all sales evidence
Option A substitutes estimated construction cost for all sales evidence. Construction cost belongs to the cost approach, and replacing sales evidence with it does not satisfy the requirement to analyze available comparable sales when that approach is necessary.
Option B: Skip sales analysis because the report will be Restricted
Option B skips sales analysis because the report will be Restricted. Choosing a shorter reporting option does not waive necessary development work under Standard 1.
Option D: Treat single-property sales comparison as governed only by mass appraisal standards
Option D treats single-property sales comparison as governed only by mass appraisal standards. A single-property real property appraisal is developed under Standard 1, which contains SR 1-4(a); mass appraisal standards address a different type of assignment.
Necessary approach, real analysis
If sales comparison is needed for credibility, analyze the sales that are available; report format does not shrink development.
How to use: Use this to reject options that let reporting choices or other approaches stand in for required sales analysis.
Exam Tip
Separate development (Standard 1) from reporting (Standard 2); a reporting option does not remove a development requirement.
Common Mistakes to Avoid
- -Believing a Restricted Appraisal Report allows less development
- -Assuming USPAP sets a fixed minimum number of comparables
- -Using cost data in place of available sales evidence
Concept Deep Dive
Analysis
This question tests SR 1-4(a), which applies when the sales comparison approach is necessary for credible assignment results. The rule requires analysis of the comparable sales data that are available to indicate a value conclusion. Eliminate options that replace, skip, or misassign that analysis.
Background Knowledge
USPAP does not require every approach in every assignment; the scope of work decides which approaches are necessary for credible results. Once the sales comparison approach is necessary, the appraiser must analyze the available comparable sales data. Development requirements stay the same regardless of whether an Appraisal Report or Restricted Appraisal Report is chosen.
Real-World Application
A client wants a Restricted Appraisal Report on a suburban home. Because sales comparison is necessary for a credible result, the appraiser still researches and analyzes available comparable sales and keeps that support in the workfile.
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