Why should an appraiser state the source of the data used in a statistical analysis?
Correct Answer
D) The reader must be able to judge its reliability
Identifying relevant data sources helps intended users assess provenance, scope and reliability of the analysis. It does not substitute for verification or transfer responsibility to the provider. The analytical problem and data properties guide method choice; naming a service alone does not determine a formula. A formal bibliography is not universally required in every appraisal report.
Why This Is the Correct Answer
Option D is correct because identifying data sources lets the reader assess the provenance, scope and reliability of the analysis. Knowing where data came from helps intended users decide how much weight to give the results. Secondary market guidance also calls for naming the specific source rather than broad categories such as public records.
Why the Other Options Are Wrong
Option A: Sources determine which formula must be applied
Option A claims sources determine which formula must be applied, but method choice is guided by the analytical problem and data properties. Naming a data service does not by itself dictate a formula.
Option B: USPAP requires a bibliography in the report
Option B states USPAP requires a bibliography in the report, which is not accurate. A formal bibliography is not universally required in every appraisal report.
Option C: Naming sources shifts responsibility to the provider
Option C says naming sources shifts responsibility to the provider, which is wrong. The appraiser remains responsible for verifying and analyzing the data used.
Source shown, reliability known
Naming the source lets the reader judge whether the data can be trusted.
How to use: Use this when a question asks the purpose of disclosing data sources.
Exam Tip
Eliminate answers claiming that naming a source transfers responsibility; disclosure supports transparency, not liability shifting.
Common Mistakes to Avoid
- -Believing source disclosure shifts responsibility to the data provider
- -Assuming a formal bibliography is always required
- -Thinking the data source dictates the statistical formula
Concept Deep Dive
Analysis
This question tests why data sources are disclosed in an appraisal analysis. The purpose is to let intended users judge the provenance and reliability of the data underlying the conclusions. The other options misstate what naming a source accomplishes.
Background Knowledge
Appraisal reports should give intended users enough information to understand the analysis and its support. Disclosing data sources is part of that transparency. Specific identification, such as tax records or deed records, is more useful than vague references.
Real-World Application
An appraiser's market trend chart notes that it is based on MLS closed sales for a defined area and period. A reviewer can then judge whether the data set suits the subject's market rather than guessing where the numbers came from.
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