An appraiser develops a market-value opinion. The subject transaction information is available in the normal course of business. Which subject history must be analyzed under 2024 USPAP SR 1-5?
Correct Answer
C) Current agreements, options and listings, and three years of transfers.
For the stated market-value assignment, analyze available subject agreements, options and listings current on the effective date, and subject sales and other transfers in the preceding three years. The reference point is the effective date, not the report date. This is not limited to the last sale or a one-year period; explaining missing or irrelevant information is addressed by the corresponding reporting requirements.
Why This Is the Correct Answer
Option C is correct because SR 1-5 requires analysis of all agreements of sale, options and listings current as of the effective date, and all sales and other transfers within the three years prior to the effective date. Option C names both parts. The reference point is the effective date of the appraisal.
Why the Other Options Are Wrong
Option A: Only completed subject sales during the year before the report date.
Option A limits the analysis to completed subject sales during the year before the report date. The rule covers three years of transfers, includes current agreements, options and listings, and is measured from the effective date, not the report date.
Option B: Current comparable listings, not the subject’s own agreements or transfers.
Option B says current comparable listings, not the subject's own agreements or transfers. SR 1-5 is specifically about the subject property's own agreements, options, listings and transfers.
Option D: The subject’s most recent sale, whenever it occurred, and nothing else.
Option D says the subject's most recent sale, whenever it occurred, and nothing else. The rule is not limited to the last sale; it requires all transfers within three years plus current agreements, options and listings.
Now plus three years back
Look at what is pending now (agreements, options, listings) and what happened in the three years before the effective date (sales and transfers).
How to use: Use this when a question asks which subject history SR 1-5 requires.
Exam Tip
Check the anchor date carefully: SR 1-5 measures from the effective date, so options using the report date are wrong.
Common Mistakes to Avoid
- -Using the report date instead of the effective date
- -Analyzing only the most recent sale
- -Forgetting current options and listings
Concept Deep Dive
Analysis
This question tests the subject-history requirement in SR 1-5 for market value when the information is available in the normal course of business. Two parts are required: current agreements, options and listings as of the effective date, and all sales and other transfers within three years before the effective date. Check each option for the right categories and the right time frame.
Background Knowledge
Subject sale and listing history can reveal market reactions, motivated sales or other information relevant to value. SR 1-5 requires analysis of current agreements, options and listings and three years of prior transfers when the information is available in the normal course of business. Reporting rules address how to explain missing or irrelevant information.
Real-World Application
An appraiser values a home that is listed for sale and that transferred between family members two years before the effective date. The appraiser analyzes the current listing and the family transfer. The report explains how each relates to the market value opinion.
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