CAR CAR Market Analysis & Trends

Question 1

When reviewing an appraisal, what is the primary purpose of analyzing market trends in the subject property's neighborhood?

Accepted Answer

To determine current supply and demand conditions affecting value

Answer

To identify the appraiser's preferred comparable sales

Answer

To establish the property's assessed tax value

Answer

To calculate the cost of replacing the improvements

Question 2

Which indicator is most commonly used by appraisers and reviewers to identify a declining real estate market?

Accepted Answer

Increasing days on market and rising inventory levels

Answer

Decreasing property tax assessments

Answer

Rising construction permit applications

Answer

Increasing rental vacancy rates only

Question 3

A CAR reviewer notices the appraiser used comparable sales from 18 months ago without any time adjustment. What issue does this raise?

Accepted Answer

The report may not reflect current market conditions

Answer

The report violates lender minimum loan requirements

Answer

The appraiser used too few comparables

Answer

The subject property's legal description is incorrect

Question 4

In a rapidly appreciating market, how should a reviewer evaluate an appraiser's comparable sales selection?

Accepted Answer

Confirm that the appraiser applied appropriate upward time adjustments

Answer

Verify that the appraiser used only new construction sales

Answer

Ensure that all comparables are within one mile of the subject

Answer

Require that the appraiser use at least six comparables

Question 5

What does absorption rate measure in real estate market analysis?

Accepted Answer

The rate at which available properties are sold in a given market over a specific time period

Answer

The percentage of appraised value financed by a mortgage

Answer

The cost-per-square-foot of new construction in a neighborhood

Answer

The ratio of list price to sale price for recent transactions

Question 6

A reviewer finds that the appraiser identified the market as stable but neighborhood data shows a 25% increase in listings and a 30% drop in closed sales year-over-year. What should the reviewer conclude?

Accepted Answer

The appraiser's market condition characterization appears unsupported and requires further documentation

Answer

The appraiser's conclusion is acceptable because one-year trends are not definitive

Answer

The subject property should be reassigned to a different appraiser

Answer

The reviewer should accept the conclusion because the appraiser has local expertise