In a market-value appraisal, current subject agreements and transfer history are available in the normal course of business. Which statement reflects SR 1-5?
Correct Answer
A) Analyze current agreements and listings plus three years of transfers
For market-value development, SR 1-5 requires analysis of current agreements of sale, options, and listings and sales and other transfers during the three years before the effective date, when the information is available in the normal course of business. An unavailable or irrelevant history has corresponding reporting treatment under the applicable report rules; client brevity alone does not excuse the analysis.
Why This Is the Correct Answer
Option A is correct because SR 1-5 requires analysis of all agreements of sale, options, and listings of the subject current as of the effective date, and all sales and other transfers within the three years prior to the effective date. The stem states this information is available in the normal course of business, so the requirement applies.
Why the Other Options Are Wrong
Option B: Analyze the current contract, but not gifts or other transfers
Option B analyzes the current contract but excludes gifts or other transfers. SR 1-5 covers all sales and other transfers within the three-year period, so non-sale transfers are not excluded.
Option C: Use a six-month subject history period for each assignment
Option C uses a six-month subject history period. SR 1-5 requires a three-year look-back for sales and other transfers, and six months does not follow from the rule.
Option D: Omit relevant history whenever the client requests a shorter report
Option D omits relevant history whenever the client requests a shorter report. A client's preference for brevity does not excuse the required development analysis; reporting format does not change what must be analyzed.
Current deals plus three years
SR 1-5 looks at what is happening now (agreements, options, listings) and what happened in the last three years (sales and other transfers).
How to use: Use this to check any option that changes the look-back period or drops a category of transfer.
Exam Tip
Watch for distractors that shorten the three-year period or exclude non-sale transfers such as gifts.
Common Mistakes to Avoid
- -Using a one-year or six-month look-back instead of three years
- -Ignoring gifts, quitclaims, and other non-arm's-length transfers
- -Skipping history analysis because the client wants a short report
Concept Deep Dive
Analysis
This question tests Standards Rule 1-5, which covers the subject property's sales history in a market value appraisal. When the information is available in the normal course of business, the appraiser must analyze current agreements of sale, options, and listings, plus all sales and other transfers within the prior three years. Pick the option with both parts and the correct time period.
Background Knowledge
Prior sales, transfers, and pending agreements can reveal market conditions, motivations, or property changes that affect a value opinion. For market value assignments, USPAP requires the appraiser to analyze this history when it is available in the normal course of business, and the reporting rules address how to report it or its unavailability.
Real-World Application
While appraising a house for a refinance, the appraiser finds it was transferred by quitclaim deed between relatives two years ago and is not currently listed. The appraiser analyzes that transfer as part of the three-year history and reports the findings.
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