SAEE - Market Approach Application Questions and Answers Flashcards

In the market approach, what is the recommended minimum number of comparable sales an appraiser should analyze?

Answer: Three

Appraisal standards generally recommend a minimum of three comparable sales to establish a reliable value indication.

Which unit of comparison is MOST commonly used when applying the market approach to residential properties?

Answer: Price per square foot of living area

Price per square foot of living area is the most widely used unit of comparison for residential property valuation.

A comparable property has inferior landscaping compared to the subject property. How should this difference be handled in the market approach?

Answer: Add the landscaping value difference to the comparable's price

When a comparable is inferior in a feature, an upward adjustment is made to the comparable's sale price to reflect what it would have sold for with similar landscaping.

What is the final step in the market approach after all adjustments have been made to the comparable sales?

Answer: Reconciliation of the adjusted sale prices to arrive at a value indication

Reconciliation involves weighing the quality and reliability of each comparable to derive a supported value conclusion.

Which type of data source is considered MOST reliable for obtaining comparable sales in the market approach?

Answer: Verified closed sale records from public deed transfers

Verified closed sale records from public deed transfers provide the most reliable and objective comparable sale data.

When two comparables bracket the subject property's value, one adjusted to $420,000 and another to $460,000, and both are equally reliable, what value range should the appraiser consider?

Answer: Between $420,000 and $460,000

When equally reliable comparables bracket the subject, the indicated value falls within the range established by the adjusted prices.