When developing market value and the information is normally available, what does SR 1-5(a) require analyzing along with current subject sale agreements and options?
Correct Answer
B) Current subject listings
When developing market value and the information is available in the normal course of business, SR 1-5(a) requires analysis of current sale agreements, options and listings for the subject. SR 1-5(b) separately covers sales and other transfers in the prior three years. The rule is not an unrestricted requirement to obtain every private financial record.
Why This Is the Correct Answer
Option B is correct because SR 1-5(a) requires the appraiser, when developing market value and the information is available in the normal course of business, to analyze all agreements of sale, options and listings of the subject current as of the effective date. The stem already names sale agreements and options, so current listings complete the rule. Prior sales over three years are covered separately in SR 1-5(b).
Why the Other Options Are Wrong
Option A: The mortgages obtained by prior owners of the subject
Option A is wrong because the mortgages obtained by prior owners of the subject are not part of SR 1-5(a). The rule concerns current sale agreements, options and listings, not past owners' financing.
Option C: The seller’s complete personal tax returns
Option C is wrong because the seller's complete personal tax returns are private financial records that SR 1-5(a) does not require. The rule does not demand every private document.
Option D: The buyer’s complete employment file
Option D is wrong because the buyer's complete employment file is not subject market information. SR 1-5(a) addresses agreements and listings involving the property, not personal files of the parties.
SOL: Sales agreements, Options, Listings
SR 1-5(a) covers current SOL: sale agreements, options and listings of the subject as of the effective date.
How to use: Use this to recall the three current items SR 1-5(a) requires the appraiser to analyze.
Exam Tip
Separate SR 1-5(a), current agreements, options and listings, from SR 1-5(b), prior sales within three years.
Common Mistakes to Avoid
- -Mixing up the current listings in SR 1-5(a) with prior sales in SR 1-5(b)
- -Thinking the rule requires private financial records of buyers or sellers
- -Forgetting that listings are included with sale agreements and options
Concept Deep Dive
Analysis
This question tests SR 1-5(a), which addresses current agreements involving the subject. The rule groups agreements of sale, options and listings current as of the effective date. Recognize that listings are the missing item in the stem.
Background Knowledge
SR 1-5 requires analysis of the subject's own market history when developing market value. Part (a) covers current agreements of sale, options and listings, and part (b) covers sales and transfers within the prior three years. Both apply when the information is available in the normal course of business.
Real-World Application
A purchase-loan appraiser receives the signed sales contract and also finds the subject was listed on the MLS for 40 days before going under contract. The appraiser analyzes both the contract and the listing history in the report.
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