CRPA Real Estate Market Analysis & Strategy 5 — Questions and Answers
Question 1: In a relocation market analysis, which economic indicator is MOST directly relevant to forecasting near-term home price trends?
- Federal corporate tax rates
- Local employment growth, wage trends, and mortgage rate direction (Correct answer)
- National stock market index performance
- The relocation company's year-over-year transfer volume
Correct answer: Local employment growth, wage trends, and mortgage rate direction
Local employment and income trends combined with mortgage rate direction are the strongest near-term drivers of housing demand and price movement.
Question 2: A CRPA appraiser is comparing two otherwise identical properties, one located on a busy arterial road and one on a quiet cul-de-sac. The appraiser should handle the location difference by:
- Ignoring it because both properties are in the same zip code
- Extracting a market-supported locational adjustment from paired sales data (Correct answer)
- Applying a standard ERC-mandated 5% adjustment for traffic exposure
- Selecting only the cul-de-sac sale as the comparable since it is superior
Correct answer: Extracting a market-supported locational adjustment from paired sales data
Locational differences must be supported by market evidence through paired sales analysis or other market-derived methods, not arbitrary standard percentages.
Question 3: When a CRPA appraiser identifies that the subject neighborhood is in transition from single-family to mixed-use development, the MOST important analytical step is to:
- Use only properties from outside the transitional area as comparables
- Assess whether the transition positively or negatively affects buyer demand and marketability, and reflect this in the analysis (Correct answer)
- Automatically classify the property as having functional obsolescence
- Report the property as unlendable and decline to provide a value opinion
Correct answer: Assess whether the transition positively or negatively affects buyer demand and marketability, and reflect this in the analysis
Neighborhood transition requires the appraiser to analyze and disclose whether the change enhances or diminishes value and marketability, not to avoid the issue.
Question 4: According to ERC relocation appraisal standards, the appraiser's market condition analysis should cover a period of at MINIMUM:
- 3 months
- 6 months
- 12 months (Correct answer)
- 24 months
Correct answer: 12 months
ERC guidelines require the market analysis to cover at least the prior 12 months to capture a meaningful trend in supply, demand, and price movement.
Question 5: A relocation appraiser is asked to complete a BVO (Buyer Value Option) appraisal. The key difference from a standard relocation appraisal is that the BVO is completed:
- Before the employee lists the property and is used to set the minimum acceptable offer
- After a third-party buyer makes an offer to confirm value before the corporation purchases from the employee (Correct answer)
- Instead of an independent appraisal when the employee disputes the original value
- Only for properties in markets with more than 6 months of inventory
Correct answer: After a third-party buyer makes an offer to confirm value before the corporation purchases from the employee
In a BVO program, the appraisal is triggered by a third-party offer and is used to verify that the offer price is reasonable before the corporation purchases the property from the employee.
Question 6: Which of the following BEST describes the purpose of the competitive market analysis section of an ERC appraisal report?
- To establish the tax basis of the subject property
- To document supply and demand conditions that support the appraiser's value opinion and marketing time estimate (Correct answer)
- To recommend a listing price strategy to the relocation company
- To identify all properties currently listed by the same seller
Correct answer: To document supply and demand conditions that support the appraiser's value opinion and marketing time estimate
The competitive market analysis documents the market conditions evidence — supply, demand, absorption, and pricing trends — that underpin both the value conclusion and the marketing time estimate.
Question 7: When two ERC appraisals of the same property differ by more than 5%, the MOST appropriate resolution under ERC guidelines is to:
- Automatically accept the lower value to protect the corporation
- Order a third appraisal, with the final value determined by averaging all three or by the third appraiser's determination (Correct answer)
- Request the employee select which appraisal value to use
- Discard both appraisals and start with an entirely new appraisal panel
Correct answer: Order a third appraisal, with the final value determined by averaging all three or by the third appraiser's determination
ERC guidelines provide that when two appraisals diverge by more than 5%, a third appraisal is ordered to reconcile the difference, with the final value either averaged or determined by the third appraiser.
CRPA Real Estate Market Analysis & Strategy 5
In a relocation market analysis, which economic indicator is MOST directly relevant to forecasting near-term home price trends?