Humber/Ontario Real Estate Course 2 Exam Practice

Appraiser Davis concludes a residential property's value estimate as between $780,000 and $788,000. According to appraisal standards, this practice is:

1. Unacceptable; a single-point value is required.

2. Allowed if the range is narrow, like within 1%.

3. Permissible, especially with few comparables.

4. Only allowed for commercial properties.

5. Permitted when the range is within a specific guideline.

6. Valid when corroborated by multiple comparable sales.

The correct answer is: Permissible, especially with few comparables.

In this scenario, Appraiser Davis has provided a range for the residential property's value estimate of $780,000 to $788,000. According to appraisal standards, this practice is permissible, especially when there are few comparables available. The range given allows for a more realistic representation of the uncertainty that can come with valuing a property, considering the variability in the market and the limitations on available data. By providing a range instead of a single-point value, Appraiser Davis is acknowledging the inherent subjectivity and fluctuation in property values, which aligns with appraisal best practices. Options A, B, D, E, and F can be considered incorrect in this context for various reasons. Option A suggests that a single-point value is required, which is not always the case, especially in situations where a range better reflects the uncertainties of the market. Option B indicates that a narrow range within 1% would be acceptable, but this is not a universal standard and may not accurately capture the true value range. Option D states that this practice is only allowed for commercial properties, which is not accurate as ranges can be used in valuing residential properties as well. Option E suggests that there is a specific guideline for the range, which is not a standard requirement. Option F mentions the need for corroborating evidence from multiple comparable sales, which is not the only factor determining the appropriateness of providing a range in an appraisal.