Humber/Ontario Real Estate Course 4 Exam Practice

When appraising a property, Appraiser Morris emphasizes a recent sale more than older sales. Community market trends are stable. What should Morris consider?

1. Average the recent sale with others from six months ago.

2. Emphasize the recent sale as it is the latest data.

3. Ignore the recent sale and rely on older sales.

4. Place equal weight on both recent and older sales.

5. Rely solely on older sales as they offer more data.

6. Verify the recent sale to ensure it was at arm's length.

The correct answer is: Verify the recent sale to ensure it was at arm's length.

The focus on verifying the recent sale to ensure it was at arm's length is crucial in the appraisal process. An arm's length transaction is one that occurs between two parties who are not related and who have no special relationship, ensuring that the sale reflects fair market value. If the recent sale wasn't conducted at arm's length, it may not accurately represent the property's true value within the market. While recent sales typically provide the most relevant data due to the current market dynamics, they must also be validated to ensure that they reflect genuine market conditions. In stable market trends, the most current sales should generally be prioritized, but without the confirmation that they meet fair transaction criteria, their reliability could be compromised. Verifying that the recent sale is arm's length safeguards against anomalies that could misrepresent a property's market value, making this consideration essential for an accurate appraisal.