Which basis alone is inappropriate for delineating a competitive residential market?
Correct Answer
A) The boundary most convenient for the appraiser regardless of buyer behavior
Tax burdens, schools, transport and physical barriers can all influence actual substitution. Their importance requires market evidence. The appraiser’s convenience alone cannot establish a competitive boundary.
Why This Is the Correct Answer
Option A is correct because a boundary chosen for the appraiser's convenience, regardless of buyer behavior, does not reflect where potential buyers would search for substitutes. Competitive market boundaries must rest on market evidence of substitution.
Why the Other Options Are Wrong
Option B: School boundaries supported by buyer behavior
Option B, school boundaries supported by buyer behavior, is an appropriate basis rather than the inappropriate one. When buyers demonstrably shop by school attendance area, those lines can define the competitive market.
Option C: Transportation accessibility to employment centers, as supported by buyer behavior
Option C, transportation accessibility to employment centers as supported by buyer behavior, is an appropriate basis. Commute access often shapes where buyers look, and here it is backed by evidence of buyer behavior.
Option D: Physical barriers supported by buyer behavior
Option D, physical barriers supported by buyer behavior, is an appropriate basis. Rivers, highways or rail lines can separate markets when buyers treat them as dividing lines, as this option states.
Draw lines where buyers shop
A competitive market boundary follows buyer substitution, not the appraiser's convenience.
How to use: Use this when choosing which basis for market delineation is supported or unsupported.
Exam Tip
In a question asking which basis is inappropriate, the options supported by buyer behavior are the acceptable ones. Pick the option that ignores buyers.
Common Mistakes to Avoid
- -Using a boundary because the data is easy to access
- -Dismissing school or transit factors that buyer evidence supports
- -Ignoring buyer evidence when setting boundaries
Concept Deep Dive
Analysis
This question asks which basis, used alone, is inappropriate for drawing competitive market boundaries. Competitive markets are defined by where buyers would look for substitutes. Schools, transportation and physical barriers can all matter when buyer behavior supports them, but the appraiser's convenience has nothing to do with buyer substitution.
Background Knowledge
The search for market data should cover the same area in which potential buyers would look for comparable substitutes. Factors such as schools, transportation, tax burdens and physical barriers can shape that area, but their influence needs market support. Boundaries chosen for convenience or by fixed rules without evidence can lead to poor comparable selection.
Real-World Application
An appraiser is tempted to use the county line as the market boundary because data is easier to pull. Agent interviews show buyers routinely cross the county line for the same school district. The appraiser expands the search to where buyers actually shop.
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