Humber/Ontario Real Estate Course 4 Exam Practice

In appraisal practice, providing a valuation range is considered acceptable under what condition?

1. When precise comparables are available.

2. If the range is larger than 5% of the value.

3. If only few comparables are available.

4. For valuation of luxury properties only.

5. When appraising commercial property only.

6. When the property is unique and hard to value.

The correct answer is: If only few comparables are available.

Providing a valuation range in appraisal practice is particularly acceptable when there are only a few comparables available. This situation often arises in cases where the property being appraised does not have direct comparables in the market, or when there are few recent transactions that can serve as a basis for an accurate valuation. By utilizing a valuation range, the appraiser can account for the limited data and market variability, offering a more flexible and realistic estimate of the property's worth. In scenarios where only a handful of comparables exist, the appraiser must exercise judgment and may have to consider factors such as market conditions and property features that might influence value. A range enables the appraiser to provide an estimate that reflects the uncertainty and complexity involved in valuing the property, rather than assigning a single, potentially misleading value. Other conditions presented do not inherently warrant a valuation range. For instance, if precise comparables are available, a more definitive value could be determined. The stipulation regarding a range larger than 5% does not address the core issue of data availability, while limiting this practice to luxury or commercial properties overlooks the broader applicability of valuation ranges across diverse property types. Lastly, while unique properties can complicate valuations, the context of having few comparables directly supports the