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.
More Emerging Methods Questions
How does an alternative inspection method affect the appraiser's disclosure obligations?
A collector's photographs show a condition the appraiser believes needs specialist assessment. What is the appropriate step?
What responsibility does an appraiser retain for an error originating in a third-party database?
Under current USPAP guidance, what is the output of an automated valuation model before an appraiser analyzes it?
Which assignment type still requires the appraiser to develop an opinion of value?
A model returns an estimate far from the appraiser's own conclusion. What is the appropriate response?
What does it mean that a tool cannot comply with USPAP?
An appraiser is asked to review an assignment where an AVM supplied the value. What does the review examine?
Why is the date a data extract was pulled worth recording in the workfile?
A desktop appraisal is best described as an assignment completed how?
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