What risk arises when an appraiser uses only one data source for an entire market study?
Correct Answer
B) Transactions outside that source are invisible
Why this is correct: Relying on one source (e.g., MLS) risks missing transactions not captured by that source, such as private sales or auctions, leading to an incomplete market picture. Why the other choices are wrong: 'The study will take longer than using several' is not a primary risk; efficiency isn't the issue. 'Single-source studies are barred under Standard 1' is false; USPAP doesn't bar them but requires credible data. 'The source will charge a higher subscription fee' is a practical concern but not the core appraisal risk. Exam tip: Use multiple sources to ensure data completeness and credibility.
Why This Is the Correct Answer
Why this is correct: Relying on one source (e.g., MLS) risks missing transactions not captured by that source, such as private sales or auctions, leading to an incomplete market picture. Why the other choices are wrong: 'The study will take longer than using several' is not a primary risk; efficiency isn't the issue. 'Single-source studies are barred under Standard 1' is false; USPAP doesn't bar them but requires credible data. 'The source will charge a higher subscription fee' is a practical concern but not the core appraisal risk. Exam tip: Use multiple sources to ensure data completeness and credibility.
More emerging-appraisal-methods Questions
An appraiser consults a geographic information system for parcel boundaries. What limitation applies?
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?
A lender's guidelines require an interior inspection, but the client asks for a desktop product to save time. What should the appraiser do?
How should an appraiser respond to a client requesting a shorter turn time than credible results allow?
Which assignment type still requires the appraiser to develop an opinion of value?
An appraiser relies on a published capitalization rate survey. What must be considered?
A model returns an estimate far from the appraiser's own conclusion. What is the appropriate response?
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