What distinguishes qualitative from quantitative analysis in the sales comparison approach?
Correct Answer
A) Qualitative ranks comparables without dollar adjustments
Why this is correct: Qualitative analysis in the sales comparison approach involves ranking comparables as superior, similar, or inferior to the subject property based on overall characteristics, without assigning specific dollar adjustments to each difference. This method is appropriate when paired sales data is insufficient to support precise dollar figures, but the appraiser must still explain the reasoning behind the ranking. Why the other choices are wrong: The choice stating qualitative may only be used on commercial property is incorrect; it can be used for any property type where data is limited. The choice stating qualitative requires a larger number of comparables is wrong; the number needed depends on the analysis, not the method type. The choice stating qualitative is prohibited where sales data exists is false; it can be used even when some data exists if that data doesn't support dollar adjustments. Exam tip: Remember, qualitative = ranking; quantitative = dollar adjustments.
Why This Is the Correct Answer
Why this is correct: Qualitative analysis in the sales comparison approach involves ranking comparables as superior, similar, or inferior to the subject property based on overall characteristics, without assigning specific dollar adjustments to each difference. This method is appropriate when paired sales data is insufficient to support precise dollar figures, but the appraiser must still explain the reasoning behind the ranking. Why the other choices are wrong: The choice stating qualitative may only be used on commercial property is incorrect; it can be used for any property type where data is limited. The choice stating qualitative requires a larger number of comparables is wrong; the number needed depends on the analysis, not the method type. The choice stating qualitative is prohibited where sales data exists is false; it can be used even when some data exists if that data doesn't support dollar adjustments. Exam tip: Remember, qualitative = ranking; quantitative = dollar adjustments.
More Sales Comparison 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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