Property Valuation
When using the sales comparison approach, which of the following properties would typically be selected as a comparable sale?
AA home that sold 5 years ago in the same neighborhood
BA home sold under foreclosure (distressed sale) 3 months ago
CA similar home in the same neighborhood that sold in an arm's-length transaction within the past 6 months✓ Correct
DA home in a different market area with identical square footage
Explanation
The best comparable sales are arm's-length transactions (no unusual conditions) of similar properties in the same or similar market area, preferably sold within the past 6 months. Foreclosure sales, related-party transactions, and very old sales are poor comparables because they do not reflect open-market conditions.
Related California Property Valuation Questions
- Which federal law requires federally regulated lenders to use licensed or certified appraisers for most real estate transactions above a certain threshold?
- The principle of substitution states that:
- Which appraisal approach is most commonly used for single-family homes?
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- The principle of progression states that:
- Which of the following factors does NOT directly affect a property's market value?
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