If a comparable sale proves to be an outlier, what should the appraiser do?

Master the Mckissock General Appraiser Sales Comparison Approach Test with comprehensive quizzes and explanations. Enhance your skills in the appraiser profession and pass your exam with confidence!

Multiple Choice

If a comparable sale proves to be an outlier, what should the appraiser do?

Explanation:
Outliers in the set of comparables can distort the value estimate. If a sale stands out as not typical for the subject’s market—whether due to exceptional features, unusual financing, data error, or timing outside the normal market cycle—the appraiser should remove it from the analysis. This keeps the adjustments and the mix of comparables aligned with ordinary market behavior, preventing one strange data point from pulling the indicated value away from what the majority of market data supports. Adjusting an outlier to fit the data or giving it extra weight would bias the result. Simply ignoring it isn’t ideal if it’s truly non-representative; removal is preferred so the conclusion reflects typical market activity. If there’s a legitimate reason to retain it, you’d document and possibly apply reduced weight or a separate analysis, but standard practice is to exclude the outlier.

Outliers in the set of comparables can distort the value estimate. If a sale stands out as not typical for the subject’s market—whether due to exceptional features, unusual financing, data error, or timing outside the normal market cycle—the appraiser should remove it from the analysis. This keeps the adjustments and the mix of comparables aligned with ordinary market behavior, preventing one strange data point from pulling the indicated value away from what the majority of market data supports. Adjusting an outlier to fit the data or giving it extra weight would bias the result. Simply ignoring it isn’t ideal if it’s truly non-representative; removal is preferred so the conclusion reflects typical market activity. If there’s a legitimate reason to retain it, you’d document and possibly apply reduced weight or a separate analysis, but standard practice is to exclude the outlier.

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