Property Valuation
An Alaskan property recently sold for $500,000 in a non-arm's-length transaction between family members at a steep discount. An appraiser should:
AUse this as a comparable sale since it is a recent transaction
BExclude or heavily discount this sale as it does not reflect typical market conditions✓ Correct
CAdjust it upward by 50% to correct for the discount
DUse only the cost approach since the sale is unreliable
Explanation
A non-arm's-length transaction between related parties who are not motivated by typical market factors is not a reliable indicator of market value. Appraisers should exclude such sales or, if used, apply significant adjustments and explain why the sale was given less weight.
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