Valuation exam concept
Market value vs. market price vs. cost
A house is listed for $500,000, goes under contract at $480,000 and closes after a price reduction at $470,000. Those are three price figures. None tells you, by itself, what the owner spent or what a supported appraisal should conclude. Label the number before doing anything with it.
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The short answer
Market value is a supported opinion about the most probable price under an identified definition, for specified property rights and an effective date. Market price, as used in the questions below, is the amount actually paid in a completed sale. Cost is an actual or estimated expenditure to acquire, build, replace or improve something. These numbers can match, but they answer different questions.
Reviewed October 27, 2026. PSI covers appraisal and value principles in national III, Valuation. That entire domain has 8 of the 100 scored national broker questions across several subjects; there is no separate eight-question quota for these definitions. The practice below is original, not recalled PSI material or a validated score prediction.
Label the number, then test the evidence
- Ask what the number represents. A seller’s asking amount is list price. An accepted agreement supplies a contract price, subject to its actual terms. A completed sale establishes an actual paid price. Cost records or estimates an expenditure. An appraised market-value opinion answers a different question from all four.
- Identify the definition, rights and date. Market value is not a universal label for every tax, insurance or investment figure. An opinion for a leased fee can differ from one for a leasehold at the same address. An effective date tells you when the opinion applies; the report date tells you when it is communicated. Do not silently move a dated opinion into a later market.
- Apply the stated market-value assumptions. The familiar OCC and Fannie Mae mortgage definitions use the most probable price, typical motivation, informed and prudent parties, reasonable open-market exposure, cash-equivalent terms and freedom from undue stimulus. “Most probable” is not “the highest amount any unusually motivated buyer might pay.” The applicable assignment definition controls.
- Verify the sale before treating its price as evidence. Review rights, property condition, location, timing, exposure, relationships, motivation, financing, concessions and non-realty items. Related-party or distressed status calls for analysis; it does not automatically make every sale unusable or prove every price equals market value. A completed price remains a transaction fact even when its market meaning is limited.
- Analyze concessions by their effect on price. Under the cited Fannie Mae comparable-sale guidance, a concession adjustment reflects the supported price increase attributable to the concession, not an automatic deduction of the seller’s expenditure. A full dollar-for-dollar adjustment is acceptable when the market evidence supports the full effect. Being common does not, by itself, remove an actual concession’s price effect. Ordinary costs virtually all sellers pay because of local tradition or law are a separate issue; do not confuse them with every common concession.
- Use the relevant time interval for a comparable. Fannie Mae’s cited policy examines market change from the comparable’s contract date to the appraisal’s effective date. A positive annual trend does not prove that the shorter relevant interval rose. Support an adjustment, or its absence, with evidence. Recent does not automatically mean no adjustment, and the closing date is not silently substituted for the contract date.
- Keep expenditure and contribution separate. An improvement’s invoice does not establish the amount buyers will add to the whole property. Highly customized work can cost more than its market contribution. That difference is not, by itself, a realized sale loss, a tax deduction or proof that the entire property is worth less than its purchase price.
- Use a consistent cost-approach structure. Combine supported site value with current improvement cost after relevant accrued depreciation. State whether an estimate includes every relevant improvement, site development and entrepreneurial allowance; do not add an item twice. Physical, functional and external losses are not all the same as a repair invoice or income-tax depreciation. Land does not receive the building’s age-life depreciation calculation.
- Separate replacement from reproduction. Replacement estimates an improvement with equivalent utility using current design and materials. Reproduction seeks a duplicate as closely as possible. Neither is the historical amount the owner paid. A cost-approach indication is not automatically the final reconciled appraisal or a guaranteed selling price.
- Treat financing policy as a use of price and value, not a definition that merges them. In the cited ordinary Fannie Mae purchase-money LTV rule, the denominator is the lower of sales price or current appraised value. The guide has special-transaction exceptions and a separate rule for financed mortgage insurance. A lower appraisal does not itself rewrite the contract, require a seller reduction or decide who can cancel.
- Describe pricing work accurately. An Illinois broker can perform permitted CMA or BPO work under the actual statutory conditions, but calling it a pricing aid does not turn it into an appraisal. Do not promise a lender will accept a listing price, that an appraisal can never be challenged, or that an opinion guarantees a future sale.
| Term | Question it answers | What it does not prove |
|---|---|---|
| Market value | What should the identified interest most probably bring under the stated definition and date? | A guaranteed future selling price |
| List price | What is the seller asking? | That anyone accepted or paid it |
| Contract price | What have the parties agreed on under the actual terms? | That the sale has closed unchanged |
| Completed sale price | What was actually paid in that sale? | That all market-value assumptions were met |
| Cost | What was spent, or what would the specified work require? | Equal contribution to market value |
The distinctions that matter
| Distinction | How it works | What to notice |
|---|---|---|
| Market value vs. sale price | Value is the supported dated opinion under a definition. A completed sale supplies a paid price, which still needs analysis as market evidence. | Should most probably bring versus actually paid. |
| List price vs. contract price | List price asks. Contract price records agreement on the stated terms; closing and later amendments still matter. | Offer to the market versus accepted transaction terms. |
| Contract price vs. completed sale price | An initial agreed amount can change before closing. A failed contract is not a completed comparable sale. | Agreed initially versus actually closed. |
| Cost vs. contribution | Cost measures expenditure. Contribution measures the effect on the whole property’s value under the relevant analysis. | Invoice versus market response. |
| Replacement vs. reproduction | Replacement provides equivalent utility. Reproduction duplicates the improvement as closely as possible. | Modern substitute versus replica. |
| Effective date vs. report date | The effective date fixes the time of the value opinion. The report date is a separate reporting event. | When the value applies versus when it is reported. |
| Market value vs. investment value | Market value uses its stated market-participant assumptions. Investment value reflects a particular investor’s requirements and can differ. | Typical market participants versus a specific investor. |
| Market value vs. assessed value | Tax assessment uses the applicable legal system, dates, levels and special rules. A tax figure is not automatically a current appraisal or asking price. | Exchange opinion versus tax administration. |
| Market value vs. insurance basis | A home’s market value can include land. Insurance settlement depends on policy coverage and valuation terms; it is not automatically the price the whole property would bring. | Market exchange versus the covered-loss basis. |
| Appraisal vs. price guarantee | An appraisal supports a conclusion for its defined assignment. It does not promise a future contract, closing amount or loan approval. | Supported opinion versus promised result. |
| Concession cost vs. concession price effect | What the seller paid and how the market reacted can differ. An adjustment in the cited comparison policy addresses the supported effect on price. | Verify the effect; do not mechanically subtract every credit. |
Work through the facts
One number, two different concepts
An adequately exposed home sells for $405,000 between informed, typically motivated independent parties, with cash-equivalent terms and no unusual concessions. A supported appraisal for the same rights and date is also $405,000.
- The completed price is a transaction fact.
- The appraisal is a supported opinion using its definition and evidence.
Answer: Price and value coincide on the stated facts. Their equality does not make the concepts interchangeable in every transaction.
A special buyer pays more
A developer needs the last parcel for an assemblage and pays $500,000. The question expressly supplies credible evidence of $350,000 market value to typical participants for the same rights and date.
- The developer’s strategic benefit is a special motivation.
- The actual premium is $500,000 − $350,000 = $150,000.
Answer: The paid price exceeds the stipulated market-value opinion by $150,000. It does not establish every parcel’s value or prove that every assemblage purchase has an above-market price.
A rushed sale does not define every normal sale
A seller needs a same-week closing, allows one day of marketing and actually closes at $275,000. The exercise stipulates supported market value of $310,000 under normal conditions for the same rights and date.
- The closed amount is $275,000.
- The $35,000 difference reflects the stipulated comparison; exposure and motivation need analysis.
Answer: Do not automatically replace the supported $310,000 opinion with this one urgent sale price, or conclude that every distressed sale is unusable.
The renovation invoice is not its contribution
An owner spends $180,000 on customized finishes. Holding other conditions fixed, the exercise supplies credible market evidence that the work adds $75,000 to the whole property’s value.
- Cost is $180,000; contribution is $75,000.
- The $105,000 difference is not automatically a tax deduction or a realized sale loss.
Answer: The improvement’s cost exceeds its supplied contribution. Neither number alone is the whole home’s market value.
Same utility rather than the same details
An estimate uses present-day materials and layout to supply the same utility as an old house, without copying obsolete decorative details.
- The aim is equivalent usefulness.
- A duplicate would instead point toward reproduction.
Answer: This is replacement cost. It is not the old purchase price or a promise about market value.
The lower appraisal remains a separate input
Assume an ordinary Fannie Mae purchase-money calculation with no special exception or financed mortgage insurance: price $420,000, current appraised value $400,000, original loan $320,000. No other adjustment applies.
- The stipulated LTV base is $400,000.
- $320,000 ÷ $400,000 = 80%. The purchase-price difference not covered by the loan is $100,000 before any separate costs, credits or deposits.
Answer: Use 80% for this stated calculation. The contract price does not automatically become $400,000, and this exercise does not approve the loan or decide contractual remedies.
Follow the price through closing
The list price is $500,000. An initial contract is $480,000. A genuine $10,000 price reduction is signed, and the transaction closes at $470,000 with no further price amendment.
- Asking price: $500,000.
- Initial agreement: $480,000. Final completed amount: $470,000.
Answer: The completed sale price is $470,000. A closing-cost credit without a price amendment would be a different fact.
A cost indication needs complete inputs
Assume supported site value of $100,000, complete current improvement cost of $320,000 including all relevant allowances, and $40,000 total accrued improvement depreciation. No item is omitted or counted twice.
- Depreciated improvements: $320,000 − $40,000 = $280,000.
- Add the separately supported site: $280,000 + $100,000 = $380,000.
Answer: The simplified cost-approach indication is $380,000. It is not automatically the final reconciled appraisal or a guaranteed sales price; the building’s depreciation has not been subtracted from land.
A $15,000 concession need not mean a $15,000 adjustment
A comparable sold for $410,000 with a $15,000 financing concession. The exercise supplies credible evidence that this concession increased its sale price by $9,000. Assume no other adjustment is needed.
- The supported concession adjustment is negative $9,000.
- $410,000 − $9,000 = $401,000. The actual closed price remains $410,000.
Answer: The adjusted comparable indication is $401,000 on these stipulated facts, not an automatic $395,000. This is not a calculation of seller net proceeds or the subject’s final value. If evidence instead supported the full $15,000 effect, a full adjustment would be appropriate.
A later report does not move the effective date
An appraisal of specified rights has an effective date of September 30, 2026 and a report date of October 27, 2026. A comparable went under contract on August 15 and closed September 10. No market-change rate is supplied.
- The opinion applies to September 30; reporting on October 27 does not automatically change it.
- Under the cited Fannie Mae comparison policy, evaluate relevant market change from the comparable’s August 15 contract date through September 30, not merely from September 10 closing.
Answer: Keep the effective and report dates separate, and analyze the correct interval. Without supported market-change evidence, this exercise supplies no numerical time adjustment.
Mistakes to avoid
- “Every sale price is market value.” Verify the definition, rights, date and transaction conditions.
- “The highest imaginable offer defines market value.” The familiar mortgage definition uses most probable price under its stated conditions.
- “An asking price proves a sale.” Distinguish asking, agreed and actually closed amounts.
- “An invoice adds the same amount to value.” Measure contribution with relevant market evidence.
- “A $105,000 cost-contribution gap is a deductible tax loss.” That calculation alone establishes neither a realized sale loss nor a tax deduction.
- “Replacement cost duplicates every old detail.” Equivalent utility is replacement; a replica is reproduction.
- “One appraisal applies forever.” Keep the effective date, rights and conditions attached to the opinion.
- “Assessed value is always full current market value.” Tax rules, valuation dates, levels and exceptions matter.
- “A lower appraisal forces a seller to reduce the contract.” Financing and contractual rights require their actual terms and facts.
- “A CMA is an appraisal if the broker adds a disclaimer.” Apply the actual product, permitted use and licensing rules; a label does not cure a prohibited use.
- “A common concession never needs an adjustment.” Commonness alone does not remove its supported effect on price.
- “A full-dollar concession adjustment is always wrong.” It is appropriate when evidence supports that full price effect.
- “A new reference manual automatically creates a new USPAP edition.” The publisher lists 2024 USPAP and a separate 2026 manual; check actual state incorporation.
- “The report date is the comparable time-adjustment endpoint.” The cited policy uses the appraisal effective date, with the comparable’s contract date as the start.
Check your understanding
These are original teaching questions, not recalled or predicted PSI questions. Answer first, then explain why the other choices fail.
1. Which term identifies the supported opinion of most probable price under an applicable definition and effective date?
- Historical cost
- List price
- Market value
- Book value
Show answer and explanation
Answer: C. Market value
The definition, property rights, date and relevant market evidence frame the opinion. It is not automatically the paid price.
2. A property actually closes for $385,000. In this page’s stated exam shorthand, what is that amount?
- Insurable value
- Reproduction cost
- Market price
- Assessed value
Show answer and explanation
Answer: C. Market price
It is the completed paid price. Whether it supports market value requires analysis of the transaction and applicable definition.
3. An owner spends $90,000 on work with a stipulated $35,000 market contribution. Which statement is accurate?
- Contribution can differ from cost
- Cost always equals value
- The whole property is necessarily worth $35,000
- List price controls appraisal
Show answer and explanation
Answer: A. Contribution can differ from cost
The $35,000 is the supplied contribution, not the invoice or whole-property value. The $55,000 difference alone is not a tax deduction.
4. Which estimate supplies equivalent utility with current design and materials?
- Market price
- Replacement cost
- Reproduction cost
- Liquidation value
Show answer and explanation
Answer: B. Replacement cost
Replacement seeks a functional substitute. Reproduction seeks a duplicate as closely as possible.
5. A $500,000 listing leads to a $480,000 initial contract, then a signed $10,000 price reduction and $470,000 closing. What is the completed price?
- All three amounts are the completed price
- $480,000
- $500,000
- $470,000
Show answer and explanation
Answer: D. $470,000
The actual price amendment and closing facts establish $470,000. List and initial contract prices describe earlier stages.
6. The familiar OCC mortgage-market definition asks for which price?
- The most probable price under its stated conditions
- Whatever the seller asks
- The highest imaginable amount
- Exactly the owner’s construction cost
Show answer and explanation
Answer: A. The most probable price under its stated conditions
Most probable differs from the highest amount a specially motivated buyer might pay. The applicable assignment definition remains essential.
7. An appraisal is reported October 27 with an effective date of September 30. When does its opinion apply?
- Automatically October 27 only
- Every future closing date
- Whatever date the lender later chooses
- September 30
Show answer and explanation
Answer: D. September 30
The effective date fixes the opinion’s time. A later reporting event does not move that opinion forward without analysis.
8. Can two interests at the same address have different values?
- No, every lease has no value
- No, the address controls every right
- Yes; the rights and other assignment facts can differ
- Only if the appraiser changes the street name
Show answer and explanation
Answer: C. Yes; the rights and other assignment facts can differ
A leased fee, leasehold or other specified interest is not automatically identical to a different interest at the same property.
9. An owner’s highly customized $180,000 renovation contributes a stipulated $75,000, with other conditions fixed. What is the difference?
- $180,000
- $75,000
- $105,000
- $255,000
Show answer and explanation
Answer: C. $105,000
Subtract contribution from cost. This comparison alone does not establish a realized sale loss or an allowable tax deduction.
10. A developer pays $500,000 for a final assemblage parcel with stipulated typical-participant market value of $350,000. What follows?
- No sale price exists
- Every nearby parcel is worth $500,000
- Assemblage can never affect motivation
- The special-buyer price is $150,000 above that supplied opinion
Show answer and explanation
Answer: D. The special-buyer price is $150,000 above that supplied opinion
The facts supply both amounts and the special strategic benefit. Do not turn the price into every market participant’s value.
11. A rushed $275,000 sale occurs with inadequate normal exposure, while supported normal-condition value is stipulated at $310,000. Which statement fits?
- Every distressed sale must be discarded
- Analyze exposure and motivation before using the price as market-value evidence
- The appraisal automatically becomes $275,000
- The seller’s urgency proves the house has no value
Show answer and explanation
Answer: B. Analyze exposure and motivation before using the price as market-value evidence
The price is a fact about that sale, while its relevance to a defined normal-market opinion needs analysis. Do not invent a universal exclusion.
12. What does an unaccepted $500,000 listing establish?
- The seller’s asking amount
- That the appraisal must be $500,000
- That the buyer paid $500,000
- That financing is approved
Show answer and explanation
Answer: A. The seller’s asking amount
A listing amount does not itself prove agreement, payment, value or lender approval.
13. What describes the price in an accepted contract that has not closed?
- The reproduction cost
- The property-tax assessment
- A guaranteed closed comparable in every case
- An agreed amount subject to the actual terms, not proof of a completed sale
Show answer and explanation
Answer: D. An agreed amount subject to the actual terms, not proof of a completed sale
Contingencies, amendments and failure to close remain possible. Verify the completed transaction before treating it as a closed sale.
14. In the expressly stipulated ordinary purchase example, price is $420,000, appraisal $400,000 and loan $320,000. What is LTV?
- 20%
- 80%
- 105%
- 76.19%
Show answer and explanation
Answer: B. 80%
The supplied lower-of rule uses $400,000. Divide $320,000 by that base; the contract price is still a separate figure.
15. Supported site is $100,000, complete improvements cost $320,000 and accrued improvement depreciation $40,000. What is the cost indication with no duplication or omission?
- $460,000
- $320,000
- $380,000
- $280,000
Show answer and explanation
Answer: C. $380,000
Subtract the improvement loss, then add site value: $320,000 − $40,000 + $100,000. This indication is not automatically the final reconciliation.
16. Which statement about assessed value is safest?
- It follows the applicable tax system and is not automatically current market value
- It is identical to every insurance settlement
- It always equals the latest asking price
- It always equals every current appraisal
Show answer and explanation
Answer: A. It follows the applicable tax system and is not automatically current market value
Valuation dates, assessment levels, equalization and special rules can matter. Do not copy one tax figure into another valuation purpose.
17. Which statement about a home’s insurance settlement is correct?
- It always pays the whole property’s sale price including land
- Every policy has identical replacement terms
- The actual policy coverage and valuation basis matter
- A listing price fixes every claim
Show answer and explanation
Answer: C. The actual policy coverage and valuation basis matter
Market exchange value and the covered-loss basis differ. The actual coverage, limits and terms control a claim.
18. Does a lower appraisal by itself compel a seller to reduce the price?
- Yes, if the buyer asks orally
- No; the actual contract, financing and available options matter
- Yes, in every contract
- Yes, because price and value are synonyms
Show answer and explanation
Answer: B. No; the actual contract, financing and available options matter
A lender’s valuation input does not itself amend the parties’ contract or determine cancellation, deposit or renegotiation rights.
19. Which figure reflects the requirements of a particular investor rather than automatically those of typical market participants?
- Investment value
- List price
- Historical invoice
- Every tax assessment
Show answer and explanation
Answer: A. Investment value
An investor’s criteria and strategic advantages can differ from the applicable market-value assumptions; the results can also coincide.
20. Which statement correctly describes a broker’s CMA?
- It is a distinct pricing or valuation product subject to actual permitted-use rules
- A disclaimer authorizes any prohibited use
- It automatically replaces every required appraisal
- Calling it an appraisal makes it one
Show answer and explanation
Answer: A. It is a distinct pricing or valuation product subject to actual permitted-use rules
Illinois permits specified CMA/BPO work under conditions. Correct labeling and the allowed use matter; this is not permission to substitute it for a required appraisal.
21. A $410,000 comparable has a $15,000 concession, with a stipulated $9,000 price effect and no other adjustment. What is its adjusted indication?
- $395,000
- $425,000
- $410,000 plus $9,000
- $401,000
Show answer and explanation
Answer: D. $401,000
Subtract the supported $9,000 effect. The actual transaction price remains $410,000; this does not calculate seller net or the subject’s final value.
22. Which statement fits the cited Fannie Mae concession guidance?
- Common concessions can never affect price
- Every positive property adjustment is prohibited
- Every credit must always be deducted dollar for dollar
- Use supported market effect; a full-dollar adjustment is acceptable when evidence supports it
Show answer and explanation
Answer: D. Use supported market effect; a full-dollar adjustment is acceptable when evidence supports it
Market effect controls. Ordinary virtually universal seller costs required by law or local tradition are distinct; the rule on positive concession adjustments is not a ban on all positive property adjustments.
23. The publisher lists 2024 USPAP as current and a separate 2026 Guidance and Reference Manual. Which statement is correct?
- The manual automatically replaces the standards with 2026 USPAP
- The publisher’s page proves this website has read the paid books
- Every appraisal law automatically adopts any later publication
- The 2026 manual is not a new 2026 edition of USPAP
Show answer and explanation
Answer: D. The 2026 manual is not a new 2026 edition of USPAP
The publications have different functions. Illinois incorporation is governed by its actual rule; neither current-edition verification nor a form establishes complete assignment compliance.
24. For the cited Fannie Mae time-adjustment policy, which interval is relevant?
- Only the report date to the buyer’s move-in date
- Comparable contract date to appraisal effective date
- Only the comparable’s closing date to today
- Always one full calendar year
Show answer and explanation
Answer: B. Comparable contract date to appraisal effective date
Analyze actual market change over that interval. A broad annual trend or a recent closing does not supply an automatic numerical adjustment.
Common questions
What is the difference between market value, market price and cost?
Value is a supported opinion under a definition for identified rights and a date. In this page’s exam questions, market price means the completed-sale amount. Cost is expenditure, historical or estimated. Some technical glossaries use price for amounts asked or offered too, or attach more conditions to market price. Follow the definition and transaction stage the question supplies.
Is market value the highest price someone might pay?
The familiar OCC and Fannie Mae mortgage definitions use most probable price, with typical motivation, informed parties, reasonable exposure, cash-equivalent terms and no undue stimulus. A special buyer’s maximum is not automatically that conclusion. Other purposes can require different definitions, so identify the assignment before importing a mortgage definition.
Are list price, contract price and sale price interchangeable?
No. A listing asks; an accepted contract records agreement on its terms; a completed sale establishes the final paid amount. A price amendment can change the initial agreement. A concession does not automatically amend the face price. Verify the actual closing and terms rather than treating a pending or canceled contract as a closed sale.
Can a sale price differ from market value?
Yes. Inadequate exposure, special motivation, unusual financing, concessions, non-realty items, rights or timing can matter. A family relationship or distressed status is a reason to investigate, not an automatic rule that every such transaction is unusable. When price and a supported opinion coincide, they still represent different concepts.
Can construction or renovation cost exceed market value or contribution?
Yes. Market demand and the utility of the work can support less than its cost. An improvement can also contribute more than its cost under the right facts. Identify whether the question compares contribution to the whole property, total value, historical acquisition cost or current construction cost. A cost-contribution difference alone establishes no tax deduction.
What is replacement cost versus reproduction cost?
Replacement provides equivalent utility using current design and materials. Reproduction seeks a duplicate as closely as possible. Historical cost records what was spent at an earlier time. These measures can differ, and none automatically establishes a whole-property selling price.
What is the basic cost-approach formula?
Use supported site value plus complete current improvement cost less relevant accrued improvement depreciation. Keep site development and entrepreneurial allowances in their proper scope, avoid omissions and duplication, and do not subtract the building’s age-life loss from land. Physical, functional and external appraisal depreciation are not automatically income-tax deductions. Reconcile the supported approaches rather than declaring the cost indication the final answer in every assignment.
Why does the appraisal’s effective date matter?
It fixes when the opinion applies. The report can be issued later. Property condition, rights and market conditions can change, so a September 30 opinion does not automatically become an October 27 opinion because of the report date. No appraisal guarantees the result of a later listing or closing.
Why do the property rights appraised matter?
A street address identifies a location, not every legal interest. Fee simple, leased fee, leasehold, an easement or a partial interest can pose different valuation questions. State the rights and relevant conditions before comparing opinions; different interests do not require identical conclusions.
Why might the lender use the lower of price or appraisal?
The cited Fannie Mae ordinary purchase-money LTV policy uses the lower of sales price or current appraised value. Special transactions can have different rules, and financed mortgage insurance has separate treatment. This is a financing calculation, not a declaration that price and market value are identical, a loan approval, or an automatic amendment to the contract.
Does a low appraisal mean the seller must cut the price or return the deposit?
Not by itself. Read the actual appraisal and financing contingencies, notice requirements and other contract terms. Negotiation, additional permitted funds, a proper reconsideration request or a contractual exit may be possible, but no one option is guaranteed by the numbers alone. The appraisal is a professional opinion, not an infallible ruling or a private legal remedy.
Is Illinois assessed value the same as market value?
No automatic equality follows. Illinois assessment depends on applicable law, valuation dates, assessment levels, equalization, exemptions and special-property rules. Ordinary one-third assessment treatment is not universal: Cook County classification and other special rules matter. A tax bill, assessed value, taxable value and current market-value opinion are distinct figures.
Is insurable value the same as market value?
Not automatically. Market value can include land and location influences. Insurance settlement depends on what is covered and the policy’s replacement-cost, actual-cash-value or other terms, limits and conditions. The Illinois Department of Insurance expressly distinguishes market value from the usual insurance-claim basis. This page does not calculate a claim or recommend coverage.
Can an Illinois broker provide a CMA instead of an appraisal?
A CMA or BPO can serve permitted purposes under Illinois law, with the required conditions and reporting rules. It is not automatically interchangeable with an appraisal. The statutory restriction on serving as the primary market-value basis for a financial institution’s mortgage origination secured by that property is particularly important; it is not a blanket ban on every lender-related pricing request. Labels and disclaimers do not authorize a prohibited use.
Should every seller concession be subtracted dollar for dollar?
No. In the cited Fannie Mae comparable-sale policy, the negative adjustment reflects the supported increase in price caused by the concession. A full-dollar adjustment is acceptable if the evidence supports that effect. A concession can be common and still inflate price. Ordinary seller costs paid in virtually all transactions because of local tradition or law are a separate category. The policy does not permit positive concession adjustments; that is not a ban on all positive adjustments for property differences.
Which USPAP edition is current in October 2026?
The Appraisal Foundation lists the 2024 edition as current. Its 2026 Guidance and Reference Manual is a separate publication containing advisory opinions, FAQs and reference material, not a new 2026 edition of USPAP. Illinois’s incorporation rule identifies 2024 USPAP and does not automatically adopt later editions or amendments. This page verifies the publisher’s current-edition information and the identified Illinois rule; it does not claim a fresh reading of the paid standards or manual.
Does a recent comparable need no time adjustment?
Not automatically. Under the cited Fannie Mae guidance, examine market change between its contract date and the appraisal effective date, with evidence supporting an adjustment or no adjustment. An annual upward trend can coexist with a flat or declining shorter interval. Do not use the report date or automatically replace the contract date with closing.
How should I review a missed value, price or cost question?
Name the number first: asking, agreed, paid, spent or appraised. Then identify the rights, effective date, applicable definition and any special motivation, concession or financing fact. Rework the calculation using only the supplied inputs, and explain why the other options describe a different number. These are original practice questions, not official PSI items; a practice percentage is not a validated readiness score. Use the related lessons or optional app practice to revisit a specific gap.
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Choose the approach or value principle that fits the facts, then check your reasoning.
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Official sources and scope
Reviewed through October 27, 2026. The cited mortgage definition is an identified example, not a universal definition for every tax, insurance or investment purpose. Examples use expressly supplied values and conditions, not current Illinois price quotes or private appraisal findings. Current primary guidance and Illinois provisions are linked below.
- PSI Illinois Candidate Information Booklet: National Valuation scope
- OCC: appraisal and market-value definitions, 12 CFR 34.42
- Fannie Mae: definition of market value
- Fannie Mae: cost and income approach to value
- Fannie Mae: concessions, market reaction and timing
- Fannie Mae: purchase price and appraised value for LTV
- California DRE glossary: market price as price paid
- IAAO Glossary, third edition: substitution and related valuation definitions
- Fannie Mae B4-1.3-08: comparable selection
- Fannie Mae B4-1.3-04: site influence and highest and best use
- Fannie Mae B4-1.3-11: reconciliation and explained weighting
- 35 ILCS200/1-50: fair cash value
- 35 ILCS200/9-145: qualified assessment level
- Illinois Department of Revenue: assessment differences
- CFPB: an appraisal below the sale price
- 68 Ill. Adm. Code 1455.240: incorporated USPAP edition and qualified exception
- 225 ILCS 454/10-45: permitted uses and complete written-report contents
- 225 ILCS 454/1-10: CMA, BPO and ordinary-course compensation exclusion
- California DRE Reference Book, chapter 15, printed pages 406-412: general cost approach, depreciation and age-life teaching
- Fannie Mae UAD 3.6 supplement: September 2026 income policy
- IAAO Glossary: entrepreneurial incentive and profit
- The Appraisal Foundation: current USPAP and separate reference manual
- Illinois Department of Insurance: market value and insurance valuation
This is exam preparation, not advice for a specific transaction. State law and the applicable facts control. Our editorial and corrections process explains how to report an issue.