Property Valuation
What does 'arm's length transaction' mean in Rhode Island real estate appraisal?
AA transaction where buyer and seller must stand at least arm's length apart
BA transaction between unrelated parties, each acting in their own best interest without undue pressure✓ Correct
CA transaction completed without a real estate agent
DA transaction where the buyer pays the full asking price
Explanation
An arm's length transaction occurs between unrelated, unaffiliated parties who are each acting voluntarily and in their own best interest, under no coercion or special relationships that would affect the price. Appraisers use arm's length sales as valid comparable sales.
People Also Study
Related Rhode Island Questions
- A Rhode Island real estate licensee is convicted of wire fraud unrelated to real estate. Can this affect their license?Rhode Island License Law
- A Rhode Island agent who represents neither the buyer nor the seller, but assists both parties with the transaction, is acting as a:Agency
- What does 'highest and best use' mean in Rhode Island real estate appraisal?Property Valuation
- When a Rhode Island appraiser estimates the value of a duplex using the gross rent multiplier method, they divide the sale price of comparables by their annual gross rents to derive the GRM. The subject property has annual gross rents of $30,000 and the market GRM is 12. What is the indicated value?Property Valuation
- An appraiser in Rhode Island determines that a property's value is $375,000. The purchase price was $395,000. What does this mean for an FHA loan?Property Valuation
- A Rhode Island salesperson earns 3% of the sale price as their commission split. If the property sold for $420,000, what was the salesperson's earnings?Real Estate Math
- A Rhode Island buyer's agent finds out their buyer-client is willing to pay $30,000 more than their offer price. The agent is approached by the listing agent who asks about the buyer's maximum. What should the buyer's agent do?Agency
- What does 'land residual technique' mean in Rhode Island real estate appraisal?Property Valuation
Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Study This Topic
Practice More Rhode Island Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Rhode Island Quiz →