Real Estate Appraisal Practice Exam

How are comparable sales typically selected for an appraisal?

1. Based on public transportation accessibility

2. Based on home insurance rates

3. Based on similarity in design

4. Based on the time of sale

The correct answer is: Based on similarity in design

The selection of comparable sales in an appraisal is critical to determining a property's market value. Comparables, or "comps," are typically chosen for their similarities to the property being appraised to ensure an accurate valuation. This includes aspects such as size, style, age, condition, and features. By selecting properties that closely resemble the subject property in design, appraisers can make more reliable comparisons, leading to a more precise assessment of value. Design similarities are vital because they influence buyer perception and market appeal. For example, a buyer searching for a mid-century modern home would likely not compare it to a traditional colonial-style house, as these properties cater to different buyer needs and preferences. While aspects like public transportation access, home insurance rates, and the timing of sales may play a role in the broader context of property value, they do not directly relate to the primary criteria used in selecting comparable sales. The focus remains on finding properties that match closely in design and other physical characteristics, ensuring that the comparisons are relevant and meaningful.