The subject sold eighteen months ago for far less than the current opinion of value. How should the report handle this?
Correct Answer
B) Report the prior sale and reconcile it with the opinion
Why this is correct: USPAP requires reporting and reconciling prior sales of the subject within three years. The appraiser must explain any significant difference between the prior price and the current opinion (e.g., market changes, property alterations, or sale conditions). Why the other choices are wrong: "Omit it, since the prior price is now irrelevant" violates disclosure rules. "Reduce the opinion to match the earlier sale price" improperly lets past data dictate current value. "Report it only if the client asks about the history" fails the mandatory reporting requirement. Exam tip: Always report and reconcile prior sales within three years; explain discrepancies.
Why This Is the Correct Answer
Why this is correct: USPAP requires reporting and reconciling prior sales of the subject within three years. The appraiser must explain any significant difference between the prior price and the current opinion (e.g., market changes, property alterations, or sale conditions). Why the other choices are wrong: "Omit it, since the prior price is now irrelevant" violates disclosure rules. "Reduce the opinion to match the earlier sale price" improperly lets past data dictate current value. "Report it only if the client asks about the history" fails the mandatory reporting requirement. Exam tip: Always report and reconcile prior sales within three years; explain discrepancies.
More USPAP Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
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