Certified Residential Appraiser Practice Exam

Which adjustment takes into account the buyer’s and seller’s motivations?

1. Paired Data Adjustment

2. Conditions of Sale Adjustment

3. Quantitative Adjustments

4. Market Conditions Adjustment

The correct answer is: Conditions of Sale Adjustment

The conditions of sale adjustment specifically addresses the motivations and circumstances surrounding the buyer and seller in a real estate transaction. This adjustment recognizes that the price agreed upon can be influenced by factors such as urgency, special financing arrangements, or other unique circumstances specific to that sale. When appraisers analyze sales data, they assess not only the sale price but also the context in which that price was agreed upon. For example, a property sold under duress or a pressured sale may not represent the typical market value. Conversely, a sale that includes incentives for the buyer might lead to a higher sale price that does not reflect the market’s general conditions. Therefore, the conditions of sale adjustment ensures that the appraisal reflects a more accurate estimate of the property’s value by accounting for these motivations and exceptional circumstances. This adjustment is pivotal in ensuring the comparability of sales figures and helps appraisers to extract the true market value unaffected by unique buyer-seller dynamics.