A subject property sold in an arm’s-length transaction 10 months ago. How may that prior sale generally be handled in the sales comparison approach?
Correct Answer
C) It may be included as a fourth comparable or supporting data if the prior sale is relevant and properly analyzed
When the subject property has a relevant prior closed sale, that prior sale may be used as supporting data and may even be shown as a fourth comparable in the analysis when appropriate. The key is that it must be analyzed in context rather than used mechanically.
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Previous Question
Market data show home prices in a neighborhood have been increasing by 0.5% per month. A comparable went under contract 6 months before the effective date of the appraisal and closed for $360,000. Ignoring all other differences, what is the comparable’s time-adjusted indication as of the appraisal date?
Next Question
A subject property is a historic bungalow in a small neighborhood with very few recent sales. One available sale is 0.6 miles away but is a modern townhouse. Another is 2.1 miles away in a competing historic district and is much more similar in age, style, and buyer appeal. Which approach is generally best?