Under USPAP Standards Rule 1-4(a), when must an appraiser analyze comparable sales data?
Correct Answer
C) When a sales comparison approach is needed for credible results
SR 1-4(a) requires the appraiser to analyze available comparable sales data to indicate a value conclusion when a sales comparison approach is necessary for credible assignment results. It is not required in every assignment or only on request.
Why This Is the Correct Answer
Option C is correct because SR 1-4(a) states that when a sales comparison approach is necessary for credible assignment results, the appraiser must analyze such comparable sales data as are available to indicate a value conclusion. The requirement depends on whether the approach is needed for credible results.
Why the Other Options Are Wrong
Option A: In each real property appraisal assignment it performs
Option A says sales data must be analyzed in each real property appraisal assignment. USPAP ties the requirement to whether the approach is necessary for credible results, not to each assignment.
Option B: When the client specifically requests a sales comparison approach
Option B says analysis is required only when the client specifically requests a sales comparison approach. The trigger is credibility of results, and a client request is not the test.
Option D: In appraisals for federally related transactions
Option D limits the requirement to appraisals for federally related transactions. SR 1-4(a) is not limited to a transaction type; it applies whenever the approach is necessary for credible results.
Needed for credibility, then required
In USPAP, an approach becomes mandatory when it is necessary for credible assignment results.
How to use: Use this when a question asks when USPAP requires a particular approach.
Exam Tip
For USPAP approach questions, look for the phrase about credible assignment results rather than client requests or loan types.
Common Mistakes to Avoid
- -Believing USPAP requires all three approaches in each assignment
- -Letting the client decide whether an approach is needed for credibility
- -Tying USPAP requirements to the type of loan transaction
Concept Deep Dive
Analysis
This question tests the conditional nature of the USPAP Standards Rule 1-4(a) requirement. The appraiser must analyze available comparable sales data when a sales comparison approach is necessary for credible assignment results. The trigger is credibility, not every assignment, client request or transaction type.
Background Knowledge
USPAP uses scope of work and credibility to decide which approaches are needed. Standards Rule 1-4 sets out what the appraiser must analyze when each approach is necessary for credible assignment results. This lets the appraiser match the analysis to the problem being solved.
Real-World Application
An appraiser valuing a typical single-family home finds many recent sales and recognizes that buyers rely on them, so the sales comparison approach is necessary for credible results. For a unique special-purpose property with no sales, the approach may not be necessary.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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Previous Question
Two verified otherwise-matched cash-equivalent sales are $663,000 at 2550 sqft and $597,000 at 2150 sqft. Consistent area measurement and market controls support applying the extracted marginal rate to a comparable of 2200 sqft sold for $555,000, toward a subject of 2450 sqft. What are the extracted rate, signed comparable adjustment and adjusted price?
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Sensitivity analysis in the sales comparison approach tests: