When an appraiser notes terms of sale, which additional verification is appropriate?

• A. The listing agent's license
• B. Arms-length nature
• C. The fastest time on market
• D. The seller's favorite color

Answer: (B)

Verifying that a sale was conducted on an arms-length basis is essential when noting terms of sale. In an arms-length transaction, the buyers and sellers act independently and have no related-party influence, so the terms—financing, concessions, contingencies—reflect typical market behavior. This makes the reported terms reliable for appraisal purposes because they’re more likely to represent what a typical buyer would encounter in a comparable sale. If a sale isn’t arms-length, the terms may be distorted by relationships or special arrangements, and the appraiser may need to treat the data with caution or adjust accordingly.

Other options don’t address the nature of the transaction’s terms. Verifying the listing agent’s license isn’t about whether the sale was market-driven, time on market is a separate data point, and the seller’s favorite color has no bearing on the financial terms or marketability of the sale.