Real Estate Appraisal Practice Exam

Appraiser Niles uses ______ to determine a range of values based on comparing a subject property to comparable sales.

1. Market analysis.

2. Bracketing.

3. Benchmarking.

4. Valuation estimation.

The correct answer is: Bracketing.

The concept of bracketing is integral to the appraisal process as it allows appraisers to establish a range of potential values by systematically analyzing comparable properties. When Niles uses bracketing, he examines properties that are similar to the subject property and identifies their sale prices to guide his valuation assessment. By selecting comparables that are higher and lower in value, he effectively creates a spectrum that reflects the market's behavior. This approach enhances accuracy in valuation, as it considers the variability and nuances of real estate prices within a given area or asset type. Bracketing thus provides appraisers with a methodical way to capture a broader understanding of the market and hone in on a value that is well-supported by empirical data from comparable transactions. Other terms, while related to the appraisal process, do not specifically capture the mechanism of establishing a range based on direct comparisons. Market analysis typically focuses on broader trends and may not delve into the specific comparative approach of bracketing. Benchmarking often refers to comparing a property to established standards or metrics, while valuation estimation is a more general term that describes the overall process of determining value without the comparative specificity that bracketing entails.