CRPA Real Estate Market Analysis & Strategy 2 — Questions and Answers
Question 1: In a relocation appraisal, the absorption rate is BEST described as which of the following?
- The percentage of listings that sell above asking price
- The rate at which available homes are sold in a specific market over a given period (Correct answer)
- The ratio of expired listings to total active listings
- The average price reduction applied to unsold inventory
Correct answer: The rate at which available homes are sold in a specific market over a given period
Absorption rate measures how quickly available homes sell in a market, calculated by dividing monthly sales by total active listings.
Question 2: A relocation appraiser determines that a market has 6 months of inventory. This condition MOST likely indicates:
- A strong seller's market with rapid price appreciation
- A balanced market between buyers and sellers (Correct answer)
- A buyer's market with downward pressure on prices
- An irrelevant metric for relocation purposes
Correct answer: A balanced market between buyers and sellers
Six months of inventory is the traditional benchmark for a balanced market where neither buyers nor sellers have a significant advantage.
Question 3: When analyzing market trends for a CRPA report, which metric BEST indicates the direction of price movement?
- Number of active listings
- Average days on market combined with list-to-sale price ratio (Correct answer)
- Total number of real estate agents in the market
- The ratio of new construction to resale homes
Correct answer: Average days on market combined with list-to-sale price ratio
Combining days on market with list-to-sale price ratios provides a reliable directional indicator of whether prices are rising, falling, or stable.
Question 4: Under ERC guidelines, a relocation appraisal must reflect market conditions as of which date?
- The date the employee accepted the transfer
- The date the corporation authorized the relocation
- The effective date of the appraisal inspection (Correct answer)
- The date the buyout offer is presented to the employee
Correct answer: The effective date of the appraisal inspection
ERC guidelines require the appraiser's opinion of value to reflect market conditions as of the effective date of the appraisal inspection.
Question 5: A CRPA appraiser is tasked with evaluating a property in a neighborhood experiencing rapid gentrification. The MOST appropriate market analysis strategy is to:
- Ignore recent sales and rely only on sales from 12 months prior
- Weight the most recent comparable sales most heavily and explain the trend (Correct answer)
- Apply a blanket 5% upward adjustment to all comparable sales
- Limit the search area to only the subject's immediate block
Correct answer: Weight the most recent comparable sales most heavily and explain the trend
In rapidly changing markets, the appraiser should give the greatest weight to the most recent sales and clearly explain the upward trend in the report.
Question 6: Which of the following is a PRIMARY source of data for determining market conditions in a relocation appraisal?
- Employee's personal opinion of the neighborhood
- MLS sales data, pending sales, and listing statistics (Correct answer)
- The relocation company's internal pricing models
- Assessed values from the local tax authority
Correct answer: MLS sales data, pending sales, and listing statistics
MLS data including sold, pending, and active listing statistics is the primary empirical source for measuring real estate market conditions.
Question 7: In the context of relocation appraisals, 'marketing time' refers to:
- The time allocated to advertise the property before the buyout
- The estimated period required to achieve a sale at the appraised value under current market conditions (Correct answer)
- The length of the appraisal review process
- The time between listing and the first offer received
Correct answer: The estimated period required to achieve a sale at the appraised value under current market conditions
Marketing time is the appraiser's estimate of how long it would reasonably take to sell the property at the concluded value given current market conditions.
CRPA Real Estate Market Analysis & Strategy 2
In a relocation appraisal, the absorption rate is BEST described as which of the following?