What is the caution when using builder-supplied pricing for new construction comparables?
Correct Answer
C) Base prices may exclude options and incentives
Why this is correct: Builder base prices often exclude upgrades, options, and incentives, so they may not reflect the actual sale price or included features. Appraisers must verify the total consideration and inclusions. Why the other choices are wrong: "Builder prices are always below market value" is false; they can be at or above market. "New construction may not be used as a comparable" is incorrect; new construction can be valid comparables if properly analyzed. "Builder data is confidential and cannot be cited" is not true; appraisers can use publicly available data with verification. Exam tip: Always adjust builder prices for options and incentives to reflect actual transaction terms.
Why This Is the Correct Answer
Why this is correct: Builder base prices often exclude upgrades, options, and incentives, so they may not reflect the actual sale price or included features. Appraisers must verify the total consideration and inclusions. Why the other choices are wrong: "Builder prices are always below market value" is false; they can be at or above market. "New construction may not be used as a comparable" is incorrect; new construction can be valid comparables if properly analyzed. "Builder data is confidential and cannot be cited" is not true; appraisers can use publicly available data with verification. Exam tip: Always adjust builder prices for options and incentives to reflect actual transaction terms.
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