When the subject is a unique property with no local comparables, the appraiser may:
Correct Answer
C) Expand the search geographically and adjust for location
Why this is correct: When no local comparables exist, the appraiser can expand the geographic search and make a supported adjustment for location differences. This is a legitimate application of the sales comparison approach. Why the other choices are wrong: Using the assessed value as the sole indication is not a proper appraisal method. Concluding the property cannot be appraised is rarely acceptable; the appraiser must seek alternative methods. Applying the previous owner's purchase price is not a market-based approach if it's not a current, arms-length transaction. Exam tip: When local data is scarce, expand the search and support the location adjustment.
Why This Is the Correct Answer
Why this is correct: When no local comparables exist, the appraiser can expand the geographic search and make a supported adjustment for location differences. This is a legitimate application of the sales comparison approach. Why the other choices are wrong: Using the assessed value as the sole indication is not a proper appraisal method. Concluding the property cannot be appraised is rarely acceptable; the appraiser must seek alternative methods. Applying the previous owner's purchase price is not a market-based approach if it's not a current, arms-length transaction. Exam tip: When local data is scarce, expand the search and support the location adjustment.
More Sales Comparison Questions
Excess land differs from surplus land in that excess land:
A paired sales analysis reveals that homes with stainless-steel appliances sell for $2,100 more than identical homes with standard appliances — but only when the homes are priced below $350,000. In the subject’s neighborhood, median sale price is $410,000. What is the appraiser’s obligation regarding the $2,100 appliance adjustment?
GLA differs by 210 sq ft between subject and comparable. Paired sales support $65 per sq ft of living area. The line adjustment is:
Paired sales are drawn from transactions six months apart in a stable market. The time adjustment needed is:
The most appropriate unit of comparison is determined by:
A comparable superior to the subject in every adjusted category should produce an indication that is:
Three sales support $520,000; the borrower's purchase contract is $505,000. May the appraisal conclude above the contract price?
A comparable sold for $300,000 with the seller carrying a loan 2 points below market, a benefit worth $8,000. What is its cash-equivalent price?
Why is a foreclosure sale generally a poor comparable in a stable market?
A comparable sold 8 months ago for $250,000 in a market appreciating 6% per year. What is the time-adjusted price?
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A sale between a corporation and its subsidiary at book value is:
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An appraiser performs paired sales analysis for HVAC systems and identifies three valid pairs: (1) forced-air gas furnace vs. no central HVAC: $12,000 difference; (2) heat pump vs. no central HVAC: $14,500 difference; (3) forced-air gas furnace vs. heat pump: $2,200 difference. All pairs control for age, size, and location. Which conclusion is most directly supported by this paired data?