Free Pennsylvania Real Estate Practice Exam Practice Question
When performing the sales comparison analysis for an appraisal, an appraiser uses comparable sales that are arm's length transactions in the typical open market. Which of the following sales would BEST represent an arm's length transaction?
Correct Answer: B
Rationale: An arm's length transaction occurs between two parties who are independent and have no relationship, ensuring fair market value. Option B exemplifies this, as it involves a willing and informed seller and buyer, reflecting typical market conditions.
Option A, a sale between an aunt and a niece, lacks independence, potentially leading to a price influenced by familial ties. Option C, a deed in lieu of foreclosure, often involves distressed circumstances that may not reflect true market value. Lastly, Option D, a deed resulting from tax delinquency, typically occurs under duress, further deviating from the principles of a fair market transaction.
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