A comparable sale that is an REO (Real Estate Owned / bank foreclosure) sale may require an adjustment because:
Why REO sales may sell at a discount and may not represent arm's-length market value Is Correct
Answer B: REO sales may sell at a discount and may not represent arm's-length market value
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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Key Terms to Know
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
State-Specific Concepts
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