A buyer's agent in California is reviewing a CMA prepared by the listing agent. One of the comparable sales was a transaction between a parent and child at below-market price. Under California appraisal and CMA standards, how should this sale be treated?
Correct Answer
C) Exclude it from the CMA because non-arm's-length transactions do not reflect market value
Under California appraisal standards and USPAP, the sales comparison approach requires arm's-length transactions — sales where both buyer and seller act in their own best interests without undue pressure or family relationships affecting the price. A parent-to-child sale at below-market price is a non-arm's-length transaction and should be excluded from the CMA.
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Previous Question
An appraiser in Riverside County, California is making paired sales analysis to extract the value of a swimming pool. Property A (with pool) sold for $625,000. Property B (no pool, otherwise identical) sold for $590,000. Property C (with pool) sold for $710,000. Property D (no pool, otherwise identical to C) sold for $678,000. The documentary transfer tax in Riverside County is $1.10 per $1,000 of the sale price. What is the average market-derived adjustment for a swimming pool based on these paired sales?
Next Question
A California agent is verifying a comparable sale price using public records. The documentary transfer tax paid was $1,045. Los Angeles County charges $1.10 per $1,000 of the sale price, and the City of Los Angeles charges an additional $4.50 per $1,000. What was the sale price of the comparable property?