Affiliate Broker Tennessee (TN PSI) National Practice Exam `

What technique does appraiser Niles use to establish property values by comparing to others?

1. Absorption rate analysis

2. Bracketing

3. Cost approach

4. Comparative market analysis

The correct answer is: Bracketing

The technique used by appraiser Niles, which involves establishing property values by comparing similar properties to one another, is known as comparative market analysis. This method is fundamental in real estate appraisals as it assesses the value of a property based on the sale prices of comparable properties in the same area. By examining factors such as size, location, condition, and the features of the properties being compared, appraisers can arrive at a reasonable estimate of market value. This technique is particularly effective in active markets, where data from recent sales can be readily obtained, allowing for a more accurate assessment. Bracketing, on the other hand, refers to the process of determining value ranges by evaluating properties that are higher and lower in price than the subject property. While it is a useful technique in certain contexts, it does not focus on direct comparatives like the comparative market analysis does. In summary, comparative market analysis is centered on direct comparisons between similar properties, which provides a clearer picture of the market value for appraisal purposes.