Public recording lags closing by several weeks in a rapidly changing market. What is the principal limitation of relying only on records currently available?
Correct Answer
B) The newest transactions may be missing, limiting timeliness
A recording delay can leave the newest transactions absent, reducing timeliness of a public-record-only data set. The direction and magnitude of any trend distortion depend on actual market movement and missing observations; understatement is not assured. Recorded sales remain useful when verified and evaluated with appropriate current evidence and adjustment support.
Why This Is the Correct Answer
Option B is correct because a recording delay can leave the newest transactions out of a public-record-only data set, reducing its timeliness. In a rapidly changing market those missing sales are the ones most reflective of current conditions. The direction and size of any resulting distortion depend on actual market movement, so the key limitation is timeliness rather than a guaranteed bias in one direction.
Why the Other Options Are Wrong
Option A: Recorded transactions become unusable for analysis
Option A claims recorded transactions become unusable for analysis, which is wrong. Recorded sales remain useful when verified and evaluated alongside appropriate current evidence and adjustment support.
Option C: The sample becomes too large to analyze efficiently
Option C says the sample becomes too large to analyze efficiently, but a recording lag removes recent sales rather than adding observations. If anything, the available sample is smaller and less current.
Option D: Verification of the recorded sales is no longer needed
Option D suggests verification of recorded sales is no longer needed, which is incorrect. Recording a deed does not confirm price, conditions of sale or other details, so verification remains necessary regardless of the lag.
Lag loses the latest
A recording lag trims the newest end of the data, so the freshest market signal is the part most likely missing.
How to use: Use this when a question describes delayed recording or reporting and asks what limitation results.
Exam Tip
Choose the answer that names the specific consequence of the lag, missing recent sales, rather than an answer that declares the data unusable or verification unnecessary.
Common Mistakes to Avoid
- -Assuming the recording lag always causes values to be understated
- -Treating recorded sales as unusable once a lag exists
- -Assuming recorded data need no verification
Concept Deep Dive
Analysis
This question tests awareness of data timeliness when public records lag actual closings. In a rapidly changing market, the most recent sales are the most informative about current conditions, yet they may not yet be recorded. The reasoning is to identify what is lost by the lag: the newest transactions, which limits how current the data set is.
Background Knowledge
Public records are a common data source, but deeds are often recorded some time after closing. Appraisers supplement them with sources such as MLS data, pending sales, and participant interviews to capture current market conditions. Timeliness matters most when prices are changing quickly.
Real-World Application
During a fast price run-up, an appraiser finds that county records show only sales closed more than a month ago. The appraiser checks MLS for recent closed and pending sales and interviews agents so the analysis reflects current conditions rather than relying only on recorded deeds.
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A set of sale prices has a median of $420,000 and an average absolute deviation from the median of $21,000. What is the coefficient of dispersion, as a percentage to two decimals?
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Eight sales in a market area, in ascending order of price, sold for $210,000, $230,000, $245,000, $260,000, $275,000, $290,000, $310,000, $340,000. By the nearest-rank method, which takes the lowest price at or below which at least 70% of the sales fall, what is the 70th percentile?