An agent discovers that a comparable property sale they used in their market appraisal was actually between related parties at below market value. What is their professional obligation?
Correct Answer
B) Exclude the related-party sale and revise the appraisal using arm's-length sales
A sale between related parties at below market value is not arm's-length evidence of what the property would fetch. The agent should take it out of the analysis and revise the appraisal using genuine market sales; keeping it at full weight risks misleading the client about value.
Why This Is the Correct Answer
Comparable sales must be arm's-length transactions. Once the agent knows a sale was between related parties below market, it should be excluded and the appraisal revised so the client is not misled about value.
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