RPA Sales Comparison Approach 2

Question 1

What is 'bracketing' in the sales comparison approach?

Accepted Answer

Selecting comparables with features both superior and inferior to the subject

Answer

Bracketing means selecting comparables that bracket the subject property — some superior and some inferior — so the subject's value falls within the range of adjusted prices.

Question 2

When a comparable sale involved seller-paid closing costs (concessions) of $5,000, how should the appraiser treat this?

Accepted Answer

Subtract $5,000 from the comparable's sale price

Answer

Seller concessions inflate the stated sale price, so the appraiser subtracts the concession amount to arrive at a cash-equivalent or market price.

Question 3

What is the 'unit of comparison' in the sales comparison approach?

Accepted Answer

A common denominator used to compare properties of different sizes or types

Answer

A unit of comparison (e.g., price per square foot, price per unit) is a common denominator that allows appraisers to compare properties of varying sizes or configurations on an equal basis.

Question 4

What does 'arm's length transaction' mean in real property appraisal?

Accepted Answer

The buyer and seller acted independently with no special relationship or duress

Answer

An arm's length transaction is one in which buyer and seller act independently, are well-informed, and are not under undue pressure, producing a market-based sale price.

Question 5

Which of the following sales would MOST likely require exclusion or significant adjustment in a residential sales comparison approach?

Accepted Answer

A sale between a parent and child at below-market price

Answer

A sale between related parties is not arm's length and likely does not reflect market value, making it unsuitable as a comparable without significant investigation.

(RPA) Real Property Appraiser Certification Practice Test

(RPA) Real Property Appraiser Certification Practice Test

RPA Sales Comparison Approach 2