Property Valuation
In Washington, an appraiser who discovers evidence of recent sales manipulation in the comparables data should:
AUse the manipulated sales as-is because they are recorded
BNot use sales that appear to reflect atypical market conditions (non-arm's-length) and disclose the issue in the report✓ Correct
CAverage the manipulated sales with arm's-length sales
DReport the manipulation to the county auditor
Explanation
USPAP requires appraisers to use only arm's-length sales as comparables. Sales that appear to be non-arm's-length (foreclosures, related-party sales, inflated sales) should generally be excluded or heavily qualified, and the appraiser should disclose the analysis in the report.
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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.
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.
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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