Market Approach Application Flashcards
7 cards from real SAEE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Market Approach Application flashcards as text
When applying the market approach, what is the primary basis for estimating a subject property's value?
Answer: Recent sale prices of comparable properties
The market approach derives value from the recent sale prices of similar, competing properties.
An adjustment to a comparable sale is made because the comparable has a feature the subject lacks. The adjustment should be:
Answer: Subtracted from the comparable's sale price
If the comparable is superior, its price is adjusted downward to reflect the subject.
Which sale would generally NOT qualify as an arm's-length transaction for use as a comparable?
Answer: A sale between two family members at a discount
Sales between related parties are not arm's-length and may not reflect true market value.
The principle of substitution underlies the market approach because it holds that:
Answer: A buyer will pay no more than the cost of an equally desirable substitute
Substitution states a buyer pays no more than an equally desirable alternative would cost.
When selecting comparable sales, which factor is most important to match closely with the subject?
Answer: Property type, location, and date of sale
Comparables should be similar in type, location, and recency to be reliable.
A comparable sold six months ago in a rising market. To account for time, the appraiser applies a:
Answer: Market conditions (time) adjustment
A market conditions adjustment corrects for price changes between the sale date and the effective date.
After adjusting several comparables, the appraiser arrives at differing indicated values. The final step is to:
Answer: Reconcile the indications into a single value opinion
Reconciliation weighs the reliability of each comparable to form a final value opinion.