Real Estate Appraisal Practice Exam

When should an appraiser make an adjustment for sales or financing concessions?

1. After assessing market conditions

2. First, before adjusting anything else

3. During the final analysis

4. Only if necessary

The correct answer is: First, before adjusting anything else

Making an adjustment for sales or financing concessions is crucial in the appraisal process because it ensures that the appraised value accurately reflects the true market conditions without the influence of atypical payment arrangements. The correct approach involves addressing these adjustments first, as they can significantly impact the comparability of the subject property to the comparable sales being analyzed. Adjusting for concessions at the outset allows the appraiser to establish a clearer baseline value. This is essential before considering other factors that may influence value, such as property features, location differences, or overall market trends. By prioritizing these adjustments, the appraiser can avoid misrepresentation of value that could occur if concessions are not accounted for until later in the appraisal process. Thus, dealing with sales or financing concessions at the beginning lays a strong foundation for accurate valuation, leading to a more reliable final appraisal report. In contrast, assessing market conditions typically happens before the adjustments but does not specifically dictate when concessions should be adjusted. While the final analysis includes all adjustments, it is not the ideal stage for addressing initial concessions, which should be resolved beforehand. Lastly, only adjusting if necessary may lead to inconsistencies in valuation and fails to recognize concessions' potential impact on the overall appraisal. Therefore, adjustments for these concessions should take