SAEE SAEE - Market Approach Application Questions and Answers 5

Question 1

An appraiser uses five comparables with adjusted values of $400,000, $402,000, $398,000, $450,000, and $401,000. What is the BEST course of action regarding the $450,000 comparable?

Accepted Answer

Give it the least weight due to its large divergence from the cluster

Answer

The outlier should remain in the analysis but receive minimal weight, with the appraiser explaining in the report why it diverges from the cluster.

Question 2

Market conditions adjustments (time adjustments) should be based on:

Accepted Answer

Paired sales or resale data that demonstrate actual price change over time

Answer

Market conditions adjustments must be empirically derived from local paired sales or resale data, not national indices or subjective opinion.

Question 3

What is the primary disadvantage of using a REO (bank-owned) sale as a comparable?

Accepted Answer

REO sales may reflect distressed conditions and may not represent arm's length market value

Answer

Foreclosure and REO sales may be priced below market due to seller urgency, limiting their reliability as market value indicators without adjustment.

Question 4

When making a percentage adjustment for location, the appraiser should apply the percentage to:

Accepted Answer

The unadjusted sale price of the comparable

Answer

Percentage adjustments for location (and other features) are typically applied to the unadjusted sale price, before other adjustments are layered in.

Question 5

A subject property has a pool and all four comparables lack pools. Paired sales indicate a pool adds $18,000. Which statement BEST describes this situation?

Accepted Answer

A positive $18,000 adjustment is added to each comparable's sale price

Answer

Since the comparables are inferior (no pool), add $18,000 to each comparable to account for the pool's market contribution.

SAEE Test Practice Test

SAEE Test Practice Test

SAEE SAEE - Market Approach Application Questions and Answers 5