Two advertisements quote asking prices but the actual closed consideration is uncertain. Which step best addresses the actual completed sale price?
Correct Answer
D) Verify knowledgeable participants and appropriate transaction documents
Seek reliable evidence about the actual completed transaction, such as knowledgeable participants and appropriate closing or recorded documents, and reconcile inconsistencies. A deed is not guaranteed to state consideration. MLS data may include closed prices, so it is not categorically asking-price-only. An AVM estimate or advertisement alone does not establish the actual paid sale price.
Why This Is the Correct Answer
Option D is correct because confirming the sale with knowledgeable participants, such as the buyer, seller or agents, and reviewing appropriate closing or recorded documents provides evidence of the actual consideration. Any inconsistencies among sources can then be reconciled before the price is used in analysis.
Why the Other Options Are Wrong
Option A: Treat an online AVM estimate as proof of payment
Option A treats an online AVM estimate as proof of payment. An automated valuation model produces a value estimate, not a record of what a buyer actually paid.
Option B: Use the earliest asking price as the sale price, without further inquiry or documents
Option B uses the earliest asking price as the sale price without further inquiry or documents. An asking price, especially an early one, may have been reduced or negotiated and does not show the completed price.
Option C: Use the highest advertised asking price as the sale price
Option C uses the highest advertised asking price as the sale price. Picking the highest ask has no basis in what was actually paid and can overstate the transaction.
Asked is not paid
An asking price is what the seller hoped for; the sale price is what the buyer paid, so ask the people and papers from the closing.
How to use: Use this when a question offers asking prices or estimates as a substitute for a verified sale price.
Exam Tip
When a question asks how to establish an actual sale price, prefer answers involving verification with transaction participants and documents over advertised or estimated figures.
Common Mistakes to Avoid
- -Using an asking price as if it were the closed sale price
- -Treating an AVM figure as evidence of a completed transaction
- -Assuming a deed will state the consideration paid
Concept Deep Dive
Analysis
This question tests how to establish the actual price paid when only asking prices are known. An asking price is an offer, not a completed transaction. The appraiser needs evidence of what was actually paid, from people involved in the deal or from transaction documents.
Background Knowledge
Sales data should be confirmed or verified by contacting buyers, sellers or other knowledgeable participants in the transaction. Deeds and public records do not consistently state consideration, and MLS records may contain closed prices as well as asking prices. Reliable verification reconciles these sources rather than relying on a single advertisement or estimate.
Real-World Application
An appraiser finds a comparable advertised at two different asking prices but no closed price in the data source. The appraiser contacts the selling agent and reviews the settlement information to confirm the actual price before using the sale.
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