Property Valuation
A Virginia appraiser determines that a comparable sale occurred under 'atypical motivation' — the seller was under severe financial distress. This sale is considered:
AThe best comparable
BA distress sale that may not reflect true market value and should be used with caution or excluded✓ Correct
CIrrelevant to the appraisal
DA mandatory comparable under USPAP
Explanation
Market value requires arm's-length transactions between informed parties. Distress sales (foreclosures, divorce, financial hardship) may not reflect normal market conditions and are typically less reliable comparables.
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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.
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