Uniform Standards of Professional Appraisal Practice (USPAP) Practice Exam

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In a market value assignment, what makes up the basis for the appraiser's analysis?

  1. Current market conditions and forecasts

  2. Available comparable sales

  3. The appraisers' prior experience

  4. Regulatory changes and updates

The correct answer is: Available comparable sales

In a market value assignment, the appraiser's analysis is fundamentally built on available comparable sales. Comparable sales, often referred to as "comps," provide critical data that helps establish a property's market value based on similar properties that have sold recently in the vicinity. The assessment of these sales allows the appraiser to determine a fair market value by analyzing features such as location, size, condition, and amenities. The principle of substitution underpins this approach, indicating that a prudent buyer would not pay more for a property than the cost to acquire an equally desirable alternative. Hence, while current market conditions, the appraiser's prior experience, and regulatory updates may inform the analysis, the actual calculations and conclusions are directly derived from observing and acquiring comparable sales data.