Humber/Ontario Real Estate Course 4 Exam Practice

If Appraiser Samson provides a valuation range of $780,000 to $788,000, what is true according to appraisal practice?

1. This is not permitted; a single-point value is required.

2. Acceptable because the range is small (within a 1% difference).

3. Acceptable especially if limited comparables were available.

4. Only used for commercial property.

5. Acceptable only if it's within 0.5% of each other.

6. Acceptable as long as it's within a range of $20,000.

The correct answer is: Acceptable especially if limited comparables were available.

The response that indicates this practice is acceptable, especially if limited comparables were available, is grounded in the realities of the appraisal process. When appraisers encounter situations where there are few comparable properties to guide the valuation, using a range can help to reflect the uncertainty and variability inherent in the available data. In tight markets or unique property situations, a range provides valuable information about possible market values, considering that no two properties are identical. By presenting a valuation range, the appraiser effectively communicates that there is some degree of variability surrounding the value due to limited data, thus grounding the valuation in market reality while acknowledging the challenges faced in determining a precise value. This practice is often seen in residential appraisals where there are issues with finding direct comparables, justifying the need for a range rather than a strict point value. Employing a range is a recognized and appropriate method under such circumstances, aligning with the standards and expectations of the appraisal profession.