The subject is in a resort area where sales spike every summer. What does Form 1004MC require the appraiser to do about this pattern in the data?
Correct Answer
C) Explain the anomaly, such as a seasonal market
The appraiser must explain any anomalies in the data, such as seasonal markets, new construction or foreclosures.
Why This Is the Correct Answer
Option C is correct because Form 1004MC states that the appraiser must explain any anomalies in the data, such as seasonal markets, new construction or foreclosures. A summer sales spike is a seasonal anomaly that must be explained.
Why the Other Options Are Wrong
Option A: Exclude the summer months from the analysis
Option A, excluding the summer months from the analysis, is wrong because the form calls for explaining anomalies, not deleting data. Removing the busiest months would distort the market picture.
Option B: Report the current three months of data alone
Option B, reporting the current three months of data alone, is wrong because the form uses several time periods to show trends, and reporting only one period would not explain the seasonal pattern.
Option D: Average the summer and winter figures together
Option D, averaging the summer and winter figures together, is wrong because averaging hides the seasonal pattern rather than explaining it. The form requires the appraiser to explain the anomaly.
Odd data? Explain, don't erase
When market data look unusual, the answer is to explain the cause, not to delete or blend the numbers.
How to use: Use this when a question asks how to handle unusual patterns on the market conditions addendum.
Exam Tip
For anomalies in market conditions data, prefer the answer that explains them over answers that exclude or average them away.
Common Mistakes to Avoid
- -Dropping unusual months from the data
- -Averaging away a seasonal pattern
- -Leaving anomalies unexplained in the report
Concept Deep Dive
Analysis
This question tests the Form 1004MC requirement for unusual patterns in market data. A resort area with summer sales spikes shows a seasonal market. The form directs the appraiser to explain such anomalies rather than hide or alter the data.
Background Knowledge
Form 1004MC, the Market Conditions Addendum, summarizes inventory, sales, prices and days on market over set time periods. Seasonal swings, new construction and foreclosures can distort these figures, so the appraiser comments on them.
Real-World Application
An appraiser in a beach town completes the market conditions addendum in January and sees sales far lower than in summer. She explains in her comments that the market is seasonal and that the drop does not by itself indicate declining values.
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