Which statement correctly distinguishes price from value?
Correct Answer
D) An asked or paid amount is price; it does not by itself set value
A stated asking, offered or paid amount is a price fact, not automatically a value opinion. Value depends on the relevant value type and analysis; transaction motivations can cause price to differ from what others would ascribe to the property.
Why This Is the Correct Answer
Option D is correct because USPAP defines price as the amount asked, offered or paid for a property, and once stated, price is a fact. Value is an opinion based on the relevant type of value and analysis, and transaction motivations can make price differ from value.
Why the Other Options Are Wrong
Option A: The two terms identify the same dollar amount
Option A says the two terms identify the same dollar amount. Price and value can differ, for example when buyer or seller motivations affect the transaction, so they are not interchangeable.
Option B: A price is an opinion and cannot be documented as a fact
Option B says a price is an opinion and cannot be documented as a fact. USPAP states the reverse: once stated, price is a fact, while value is the opinion.
Option C: Value equals the asking price the seller sets, once the property sells
Option C says value equals the seller's asking price once the property sells. An asking price is a price, not a value opinion, and a sale does not convert it into value.
Price is fact, value is opinion
A price that has been asked, offered or paid is a fact; value is the appraiser's opinion reached through analysis.
How to use: Use it to eliminate any answer that equates a price with value or calls price an opinion.
Exam Tip
Remember the USPAP comment that a stated price is a fact. Answers that reverse fact and opinion are typically wrong.
Common Mistakes to Avoid
- -Treating the contract price as the market value
- -Calling price an opinion
- -Equating asking price with value
Concept Deep Dive
Analysis
This question tests the USPAP distinction between price and value. Price is the amount asked, offered or paid, and once stated it is a fact. Value is an opinion that depends on the type of value and the appraiser's analysis, so a price does not by itself set value.
Background Knowledge
USPAP separates the facts of a transaction from the appraiser's opinions. Price is a fact whether publicly disclosed or kept private, while value is an opinion that must be defined by type, such as market value. Appraisers analyze prices as evidence but reach value through their own analysis.
Real-World Application
A buyer agrees to pay well above other recent sales because the house is next door to relatives. The appraiser records the contract price as a fact but forms a market value opinion based on the market evidence, which may differ from that price.
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