Which recent transfer should an appraiser treat with the greatest caution because it is most likely a non-arm’s-length transaction?
Correct Answer
C) A sale from a mother to her son at a discounted price after private negotiations
A sale between related parties at a discounted price raises a clear question about whether the transaction reflects normal market behavior. Non-arm’s-length transfers may be influenced by family relationships or business affiliations rather than open-market bargaining, which can make them weak evidence of market value.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
More Valuation Market Analysis Questions
A buyer in Rochester is pre-approved for a conventional mortgage and wants to purchase a co-op apartment. What should the buyer's agent explain about financing a co-op purchase in New York?
A parcel is in a desirable retail corridor and buyers want it, but an unresolved title defect and missing legal access make it hard to close. Which element of value is most directly impaired?
When appraising co-op apartments in New York, all of the following factors must be considered due to their unique ownership structure EXCEPT:
A first-time buyer in New York City asks their agent about the difference between owning a co-op versus a condo. What is the fundamental ownership difference the agent should explain?
An agent in Staten Island is explaining maintenance fees to a co-op buyer. The buyer asks what expenses are typically included in a co-op maintenance fee that differ from condo common charges. What should the agent explain?
- → An appraiser is using the income approach to value a 12-unit rental building in Brooklyn. The building generates $180,000 in annual gross rental income. Operating expenses total $54,000 annually. The appraiser determines that a 7.5% capitalization rate is appropriate for this type of property in this location. What is the indicated value using the income approach?
- → An example of functional obsolescence is:
- → The best method to determine fair market value is:
- → Who typically hires the appraiser in a real estate transaction?
- → A depth table is used to estimate property value for:
- → Under federal law, which type of loan typically does NOT require a property appraisal?
- → FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act) requires:
- → For appraising a vacant lot for single-family residence construction, which approach applies?
- → The final appraisal step of weighing different approaches is called:
- → For 1930s buildings, the cost approach is least accurate due to:
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Previous Question
Rosa is preparing the sales comparison grid for a 1,900-square-foot subject property with no deck. Comparable Sale 1 sold for $412,000, has 2,000 square feet, and has a deck. Market data support a $40-per-square-foot adjustment for gross living area and an $8,000 adjustment for a deck. What is the comparable’s adjusted sale price?
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During training, Evan says that two pending sales and one active listing are enough to satisfy the comparable-sale requirement for a one-unit appraisal. Is Evan correct?