Why should an appraiser be cautious about a data source that reports only successful transactions?
Correct Answer
A) Withdrawn and expired listings also inform the market
Why this is correct: A complete market analysis requires data on both successful and unsuccessful transactions. Withdrawn and expired listings reveal the upper price limit the market rejects, indicating softening demand. Why the other choices are wrong: "Successful transactions are less reliable than listings" is false; closed sales are typically the most reliable indicator of value. "Such sources charge more than comprehensive ones" is an irrelevant operational detail, not an appraisal principle. "Closed sales may not be used without an interview" is incorrect; sales data is standard and does not require an interview. Exam tip: To avoid a biased analysis, seek data on both what sold and what did not sell.
Why This Is the Correct Answer
Withdrawn and expired listings show where properties failed to sell, bracketing the market's upper limit and signalling direction before closed prices reflect it.
Why the Other Options Are Wrong
Option B: Successful transactions are less reliable than listings
Closed transactions remain the strongest evidence of value. Listings supplement rather than outrank them.
Option C: Such sources charge more than comprehensive ones
Cost is a commercial consideration and not the analytical reason for preferring comprehensive coverage.
Option D: Closed sales may not be used without an interview
Closed sales require verification, but no rule requires an interview specifically for their use.
What Did Not Sell Tells You Too
What Did Not Sell Tells You Too. The expirations mark the ceiling the closings never reach.
How to use: Track the share of listings expiring over time. A rising share is an early softening signal.
Exam Tip
Listings generally bracket above and pendings indicate direction, while closed sales support the conclusion. Each has a distinct role.
Common Mistakes to Avoid
- -Analysing closed sales without the listing record
- -Treating listings as equivalent evidence to closed sales
- -Missing rising expirations as an early market signal
Concept Deep Dive
Analysis
A source reporting only closed transactions shows what sold and hides what did not, and the second half of that picture carries real information. Withdrawn and expired listings mark the prices at which properties failed to find buyers, which brackets the market's upper limit as directly as closed sales establish where it cleared. The pattern of failures also indicates market direction — a rising share of expirations signals softening well before closed prices reflect it — and days on market and list-to-sale ratios drawn from the full listing record show how negotiations are running. Current active listings complete the set by showing present competition, which is the supply a buyer of the subject would actually face. Relying on closed sales alone produces an analysis that is accurate about the past and blind to conditions changing now. The distractors are false: listings do not outrank closed sales as evidence, cost is not the concern, and closed sales require verification rather than an interview by rule.
Background Knowledge
Comprehensive market data includes closed sales, pending sales, active listings, and withdrawn and expired listings. Failed listings bracket the upper limit of the market and indicate direction ahead of closed price data.
Real-World Application
An appraiser notes expirations rising from 12 to 31 percent of listings over six months, and moderates the market conditions adjustment despite stable closed prices.
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?
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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?
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A desktop appraisal is best described as an assignment completed how?
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