Question 1

A sale between the property owner and a tenant can be assumed to be an open market transaction.

Accepted Answer

A sale between a property owner and a tenant is not an open market transaction because there is a pre-existing relationship between the two parties that may influence the terms of the sale. The tenant may have knowledge of the property's condition or value that others in an open market may not have, and the property owner may feel obligated to offer the tenant a lower price to maintain a good relationship or retain their tenancy. Therefore, it is not an open and free transaction that would occur on the open market.

Question 2

Data resources on the internet provide general data on the economy and regulatory information of use to the appraiser.

Accepted Answer

Data resources on the internet can provide appraisers with general data on the economy and regulatory information, which can be valuable in determining the value of property.

Question 3

A neighborhood sales study finds selling prices of $150,000, $157,500, $159,000, $162,000, and $164,000 for homes similar to the subject property. The median price of this sample is $158,500.

Accepted Answer

The median price of this sample is $159,000, as it is the middle value when the prices are arranged in ascending order.

Question 4

The first step in the sales comparison approach is to research comparable sales.

Accepted Answer

The first step in the sales comparison approach is indeed to research comparable sales. This involves seeking out properties that have sold recently and that are similar to the subject property being appraised, in terms of location, size, condition, and other relevant factors. The goal is to identify the prices at which these comparable properties sold, and to use this data as a basis for estimating the market value of the subject property.

Question 5

Even though listings and offers may be available, they are of no significant use to an appraiser.

Accepted Answer

Listings and offers may provide insight into the current market conditions, but they do not hold much weight in determining an accurate appraisal value. An appraiser must rely on more objective criteria, such as the property's physical condition, location, and recent comparable sales.

Question 6

In the analysis of sales transaction data, the actual date that the sale price was agreed upon is the theoretical date of sale.

Accepted Answer

The theoretical date of sale refers to the date when the sale price is agreed upon, as it represents the point at which the transaction terms are finalized.

Question 7

The sales comparison approach has no statistical connections.

Accepted Answer

The sales comparison approach often uses statistical methods to analyze and compare the prices of similar properties that have recently sold, in order to estimate the value of a subject property.

Question 8

USPAP requires that any listing or sale of the subject property around the date of value be considered in the appraisal.

Accepted Answer

USPAP requires that an appraiser consider any listing or sale of the subject property around the date of value, as this can impact the value of the property. The appraiser must analyze and determine the relevance of such data and include it in the appraisal report if it is deemed to be a relevant market indicator.

Question 9

The sales comparison approach is based on the principle of substitution.

Accepted Answer

The sales comparison approach assumes that a buyer will pay no more for a property than the cost of acquiring a similar or substitute property. Therefore, it is based on the principle of substitution.

Question 10

Sales data published and/or available on line for the use of subscribing appraisers is often generated by cooperating lenders and appraisers.

Accepted Answer

Sales data is commonly shared by cooperating lenders and appraisers in order to assist in the appraisal process. This data can be accessed by subscribing appraisers through various online tools and platforms.

Deck 8: The Sales Comparison Approach