Property Valuation
In the sales comparison approach, an 'arm's length transaction' is preferred because:
AIt ensures both parties live nearby
BIt indicates both parties acted freely without undue influence, producing a market-reflective price✓ Correct
CIt requires both parties to have professional representation
DIt means the transaction was completed without contingencies
Explanation
An arm's length transaction is one where both buyer and seller acted independently, knowledgeably, and without undue pressure or special relationships. Non-arm's length sales (between relatives, in foreclosure, etc.
People Also Study
Related Oregon Questions
- When adjusting comparable sales in the sales comparison approach, adjustments for market conditions (time) reflect which factor?Property Valuation
- In the sales comparison approach, 'adjustments' are made to the comparable sales to account for differences between the comparables and the subject property. If a comparable sold for $350,000 but lacks a garage that the subject has (valued at $20,000), the adjusted sale price of the comparable is:Property Valuation
- An appraiser applies the sales comparison approach and finds three comparables with adjusted values of $385,000, $392,000, and $389,000. The appraiser gives the most weight to the comparable requiring the fewest adjustments. Which comparable most likely receives the most weight?Property Valuation
- The appraiser's final value conclusion in the sales comparison approach is typically the:Property Valuation
- A property's annual NOI is $48,000. Market cap rates for similar properties are 8%. Using the income approach, what is the estimated value?Real Estate Math
- A duplex generates $1,800/month per unit. Annual expenses are $14,400. The market cap rate is 6.5%. Using the income approach, what is the estimated value?Real Estate Math
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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Study This Topic
Practice More Oregon Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Oregon Quiz →