CRPA Real Estate Market Analysis & Strategy 4 — Questions and Answers
Question 1: In relocation appraisal, 'exposure time' differs from 'marketing time' in that exposure time is:
- Always shorter than marketing time by definition
- A retrospective estimate of how long the property would have been on the market prior to the effective date to achieve the appraised value (Correct answer)
- The period during which the relocation company holds the property
- Calculated only when the property remains unsold after 90 days
Correct answer: A retrospective estimate of how long the property would have been on the market prior to the effective date to achieve the appraised value
Exposure time is a retrospective concept — the estimated period the property would have needed to be on the market before the effective appraisal date to sell at the concluded value.
Question 2: A CRPA appraiser is analyzing a market where new listings have increased 40% year-over-year while sales volume remained flat. This MOST likely indicates:
- A rapidly improving seller's market
- Growing supply imbalance that could lead to price softening (Correct answer)
- No material change in market conditions
- A signal to use only new construction as comparables
Correct answer: Growing supply imbalance that could lead to price softening
When supply grows significantly without a corresponding increase in buyer demand, inventory builds up, which typically exerts downward pressure on prices over time.
Question 3: Which of the following BEST defines 'competitive market area' in the context of a relocation appraisal?
- The zip code in which the subject property is located
- The geographic area from which buyers would typically consider the subject as a substitute for competing properties (Correct answer)
- The area defined by the relocation company's approved appraisal zones
- Any area within a 5-mile radius of the subject property
Correct answer: The geographic area from which buyers would typically consider the subject as a substitute for competing properties
The competitive market area is defined by buyer behavior — where would buyers shopping for the subject also look, making those properties true substitutes.
Question 4: When appraising a property in a resort or seasonal market for relocation purposes, the appraiser MUST:
- Apply a 10% seasonal discount to all comparable sales
- Identify and adjust for seasonal influences on sales prices and marketing time (Correct answer)
- Limit comparables to the same calendar month as the effective date
- Decline the assignment as seasonal markets are excluded from ERC guidelines
Correct answer: Identify and adjust for seasonal influences on sales prices and marketing time
Seasonal markets require the appraiser to identify how time-of-year affects pricing and demand, and to adjust comparables or explain the impact in the analysis.
Question 5: A CRPA appraiser finds that the subject property's price range has fewer than three sales in the past six months within the immediate area. The BEST course of action is to:
- Decline the assignment due to insufficient data
- Expand the time frame or geographic area while carefully noting the limitation and its impact on reliability (Correct answer)
- Use tax assessed values as substitute comparables
- Average the two available sales and report a single value without discussion
Correct answer: Expand the time frame or geographic area while carefully noting the limitation and its impact on reliability
Lack of ideal data requires expanding the search with appropriate disclosure of how data limitations affect the reliability of the value conclusion.
Question 6: Under the paired sales analysis technique, a relocation appraiser uses two sales that are identical except for one feature in order to:
- Determine the market-derived adjustment for that single differing feature (Correct answer)
- Calculate the average days on market for both properties
- Verify that both properties were arm's-length transactions
- Establish the absorption rate for a specific price segment
Correct answer: Determine the market-derived adjustment for that single differing feature
Paired sales analysis isolates a single variable between two otherwise identical sales to extract a market-supported dollar or percentage adjustment for that feature.
Question 7: A relocation appraiser observes that pendings-to-listings ratio in the subject market is 75%. This ratio MOST directly indicates:
- Seventy-five percent of listed properties will eventually expire unsold
- High buyer activity relative to available inventory, suggesting strong current demand (Correct answer)
- The market has excess supply at all price points
- The relocation company should reduce its buyout offer by 25%
Correct answer: High buyer activity relative to available inventory, suggesting strong current demand
A high pending-to-listing ratio shows that a large proportion of active listings have already attracted contracts, signaling robust current buyer demand.
CRPA Real Estate Market Analysis & Strategy 4
In relocation appraisal, 'exposure time' differs from 'marketing time' in that exposure time is: