Sales data lagging the market is a problem because closed sales reflect:
Correct Answer
A) Negotiations that occurred weeks or months earlier
Why this is correct: Closed sales reflect agreements negotiated weeks or months prior. In a rapidly changing market, this lag means closed sales may not represent current market conditions, necessitating analysis of pending sales and listings. Why the other choices are wrong: 'Prices set by the appraiser rather than the market' describes an appraisal, not a market sale. 'Only the highest offers received on each property' is not accurate; closed sales reflect the agreed-upon price, not necessarily the highest offer. 'Conditions that will exist in the coming quarter' describes a forecast, not historical data. Exam tip: The time lag between contract and closing is why pending sales are critical indicators in active markets.
Why This Is the Correct Answer
Why this is correct: Closed sales reflect agreements negotiated weeks or months prior. In a rapidly changing market, this lag means closed sales may not represent current market conditions, necessitating analysis of pending sales and listings. Why the other choices are wrong: 'Prices set by the appraiser rather than the market' describes an appraisal, not a market sale. 'Only the highest offers received on each property' is not accurate; closed sales reflect the agreed-upon price, not necessarily the highest offer. 'Conditions that will exist in the coming quarter' describes a forecast, not historical data. Exam tip: The time lag between contract and closing is why pending sales are critical indicators in active markets.
More Market Questions
Building permit data is most useful to an appraiser as:
In the neighborhood life cycle, what characterizes the decline stage?
In which phase of the real estate cycle do rising vacancies first meet a still-growing construction pipeline?
The principle of consistent use prohibits:
Employment in a one-industry town falls 20%. Through what mechanism does housing demand contract?
Frictional vacancy in a rental market refers to:
The principle of opportunity cost applied to real estate means:
A neighborhood with a wide range of property values requires the appraiser to:
In-migration to a metro area increases housing demand primarily by:
Absorption rate expressed in units per month is calculated by:
People Also Study
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam