ARA ARA Market Analysis & Comparable Sales 2 — Questions and Answers
Question 1: What adjustment is made to a comparable sale that has superior paved road frontage compared to the subject's gravel road access?
- Positive adjustment to the comparable
- No adjustment is required
- Negative adjustment to the comparable (Correct answer)
- Positive adjustment to the subject
Correct answer: Negative adjustment to the comparable
A downward (negative) adjustment is applied to the comparable to account for its superior road frontage relative to the subject.
Question 2: The 'paired sales analysis' technique is used to:
- Compare two appraisers' value opinions
- Match buyers with qualified sellers
- Find properties available for sale
- Isolate and quantify the value contribution of a single feature (Correct answer)
Correct answer: Isolate and quantify the value contribution of a single feature
Paired sales analysis compares two sales that differ only in one characteristic to extract a market-supported dollar or percentage adjustment.
Question 3: A 'distressed sale' in rural appraisal analysis refers to:
- A property located in a designated flood zone
- A sale attracting multiple competing offers
- A transaction involving contested mineral rights
- A sale where the seller faced financial duress such as foreclosure or forced liquidation (Correct answer)
Correct answer: A sale where the seller faced financial duress such as foreclosure or forced liquidation
Distressed sales do not reflect arm's length market conditions and are generally excluded or adjusted in the comparable selection process.
Question 4: When adjusting for time (market conditions) in rural comparable sales, the appraiser must:
- Always apply exactly 1% per month
- Support the adjustment with market data showing documented price changes over time (Correct answer)
- Add 5% per year as a standard practice
- Ignore time differences under 12 months
Correct answer: Support the adjustment with market data showing documented price changes over time
Market condition adjustments must be supported by evidence such as paired sales, repeat sales, or trend analysis—not arbitrary percentages.
Question 5: Which factor is MOST relevant when making location adjustments in rural property appraisal?
- Interior finish quality of any improvements
- Total number of bedrooms in the residence
- Proximity to markets, paved roads, utilities, and community services (Correct answer)
- Age and condition of the roof
Correct answer: Proximity to markets, paved roads, utilities, and community services
In rural appraisal, location value is driven by access, proximity to markets, infrastructure, and services that affect usability and buyer demand.
Question 6: Which of the following would be the BEST reason to disqualify a comparable sale from analysis?
- The property is within five miles of the subject
- It has a land use similar to the subject
- It was listed and sold through the MLS
- It was a related-party transaction sold well below market value (Correct answer)
Correct answer: It was a related-party transaction sold well below market value
Related-party or non-arm's length transactions do not reflect open-market conditions and should be excluded unless no alternatives exist.
ARA ARA Market Analysis & Comparable Sales 2
What adjustment is made to a comparable sale that has superior paved road frontage compared to the subject's gravel road access?