Certified Residential Appraiser Practice Exam

Which type of data is most critical when making a property valuation decision?

1. General statistical data only

2. Specific data about comparable properties

3. Data about environmental regulations

4. General economic forecasts

The correct answer is: Specific data about comparable properties

The selection of specific data about comparable properties as the most critical type of data in property valuation is rooted in the foundational principles of appraising. Comparable properties, or "comps," provide direct evidence regarding the market's perception of value for similar properties in a particular location and market. This data typically includes recent sales prices, property characteristics (such as size, age, and condition), and sale conditions that can significantly affect valuation. Using specific comparable property data allows appraisers to make informed adjustments based on the unique attributes of the subject property versus those of the comparables. This is essential in establishing a fair market value, as it reflects current market trends and buyer behavior in a more precise manner than general or broader data sources. While general statistical data, environmental regulations, and economic forecasts provide important context, they do not carry the immediate relevance and specificity to the property being appraised that comparable property data does. For example, general statistical data may offer insights into market trends but will lack the nuance of individual property comparisons. Similarly, environmental regulations could impact property value but are secondary to how similar properties have transacted in the market. Economic forecasts may inform future market conditions but do not substitute for the specificity required in valuation. Thus, the focus on specific data