Property Valuation
A Kentucky appraiser discovers that a comparable sale was a distressed (foreclosure) sale. The appraiser should:
AUse the sale as-is because all market sales are valid
BConsider the sale's conditions and potentially make adjustments or exclude it✓ Correct
CAutomatically disqualify the sale from consideration
DReport the foreclosure to KREC
Explanation
Distressed sales may not represent fair market value. An appraiser should evaluate the circumstances and either adjust the comparable's value or exclude it in favor of arm's-length transactions.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
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.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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