CRPA Real Estate Market Analysis & Strategy 3 — Questions and Answers
Question 1: A relocation appraiser notes that the list-to-sale price ratio in the subject market is 98.5%. This MOST likely suggests:
- Sellers are receiving significant premiums above asking price
- Properties are selling slightly below list price, indicating a moderate buyer's market (Correct answer)
- The market is in severe decline and prices are falling rapidly
- Appraisers must add 1.5% to all comparable sale prices
Correct answer: Properties are selling slightly below list price, indicating a moderate buyer's market
A 98.5% list-to-sale ratio means homes sell at 1.5% below list price on average, indicating mild negotiating leverage for buyers.
Question 2: When a CRPA report identifies a declining market, which adjustment strategy is MOST appropriate?
- Use only the oldest comparable sales to avoid inflated values
- Apply negative time adjustments to older comparable sales to reflect falling prices (Correct answer)
- Ignore market conditions and rely solely on the cost approach
- Increase the number of comparables to average out the decline
Correct answer: Apply negative time adjustments to older comparable sales to reflect falling prices
In a declining market, negative time adjustments are applied to older comparables to bring their prices in line with current lower market values.
Question 3: Market stratification in relocation appraisal means the appraiser should:
- Apply a single market trend to all price ranges uniformly
- Recognize that different price segments within the same market may behave differently (Correct answer)
- Limit comparable sales to properties within the same tax bracket
- Only analyze markets with more than 500 annual transactions
Correct answer: Recognize that different price segments within the same market may behave differently
Market stratification acknowledges that the luxury, mid-range, and entry-level segments of the same market can have very different supply, demand, and pricing dynamics.
Question 4: Which of the following scenarios would MOST strongly indicate a seller's market for a relocation appraisal?
- Days on market averaging 120 days and rising inventory
- Multiple offers, days on market under 14, and list-to-sale ratios over 100% (Correct answer)
- Stable prices over 24 months with consistent absorption
- New construction outpacing demand in all price segments
Correct answer: Multiple offers, days on market under 14, and list-to-sale ratios over 100%
Multiple offers, very short DOM, and sales prices above list price are classic indicators of strong seller's market conditions.
Question 5: A CRPA appraiser should expand the geographic search area for comparable sales primarily when:
- The relocation company requests a lower value
- There are insufficient recent sales of similar properties within the immediate market area (Correct answer)
- The subject property is less than 5 years old
- The employee requests comparables from a preferred neighborhood
Correct answer: There are insufficient recent sales of similar properties within the immediate market area
When the immediate market lacks sufficient comparable sales data, expanding the search area — while noting locational differences — is standard appraisal practice.
Question 6: The ERC Appraisal Guidelines recommend that comparables used in a relocation appraisal have a sale date within how many months of the effective appraisal date?
- 3 months
- 6 months (Correct answer)
- 12 months
- 18 months
Correct answer: 6 months
ERC guidelines generally recommend using comparable sales within the prior six months to ensure data reflects current market conditions.
Question 7: When preparing a forecast of marketing time for a relocation appraisal, the appraiser should base the estimate on:
- The corporate policy for how long buyout programs are open
- Historical and current market data including absorption rate and days on market trends (Correct answer)
- The employee's desired closing date
- The average marketing time for the entire metropolitan area regardless of price segment
Correct answer: Historical and current market data including absorption rate and days on market trends
Marketing time forecasts must be grounded in objective market data — specifically absorption rates and DOM trends for comparable properties in the same segment.
CRPA Real Estate Market Analysis & Strategy 3
A relocation appraiser notes that the list-to-sale price ratio in the subject market is 98.5%.
This MOST likely suggests: