Which statement is FALSE regarding the use of listings as comparables in the sales comparison approach?

• A. In areas where sales data are limited, listings can be used in place of sales.
• B. Listings can provide price indications when sales are scarce.
• C. Listings reflect negotiated prices and may not equal actual market transactions.
• D. Listings are less reliable than actual sold data when available.

Answer: (A)

In the sales comparison approach, you rely on prices actually paid for comparable properties, not just what someone asks for a property. Listings are useful only as a supplementary price indicator when there aren’t enough closed transactions to work from. They show asking prices and the market’s current exposure, but they do not guarantee the final sale price or reflect completed market transactions. Because of that, using listings in place of sold data can lead to misvaluations, especially since negotiated sale prices may differ from asking prices or from prices ultimately paid.

That’s why saying you can substitute listings for sales in areas with limited data isn’t correct. Listings can help gauge price direction and provide context when sales are scarce, but they are less reliable than actual sold data when those data exist. The other statements align with this: listings can offer price indications when sales are scarce; listings reflect negotiated prices and may not equal actual market transactions; and listings are less reliable than sold data when sold data are available.