Market Analysis & Property Valuation Flashcards

Which statistical measure best indicates the degree of price dispersion around the mean sale price in a market area?

Answer: Standard deviation

Standard deviation measures how widely individual sale prices are dispersed around the mean, making it the best indicator of price variability.

In a declining market, an appraiser should give MOST weight to which comparable sales?

Answer: Most recent sales regardless of location

In a declining market, the most recent sales best reflect current market conditions and should receive the greatest weight.

The principle stating that value is created and maintained when land uses in an area are compatible with each other is known as:

Answer: Conformity

The principle of conformity holds that maximum value is achieved when land uses in an area are compatible and harmonious.

A property sold for $350,000 and the gross rent multiplier in the area is 140. What is the estimated monthly rent?

Answer: $2,500

$350,000 ÷ 140 = $2,500 estimated monthly rent using the gross rent multiplier.

When analyzing a market, which factor would MOST indicate an emerging buyer's market?

Answer: Increasing months of supply

Increasing months of supply means more inventory relative to demand, which signals a shift toward buyer's market conditions.

Which valuation approach is MOST appropriate for a special-purpose property that rarely sells on the open market?

Answer: Cost approach

The cost approach is most appropriate for special-purpose properties because comparable sales and income data are typically unavailable for these unique properties.

The paired sales analysis technique is used primarily to:

Answer: Extract market adjustments for specific property features

Paired sales analysis isolates the effect of a single feature by comparing otherwise similar properties, allowing the appraiser to extract a market-supported adjustment.