Market price: the number one buyer and one seller agree on

The highest offer gives the seller less net

Scenario: Offer A is $510,000 with a $20,000 seller credit. Offer B is $500,000 with no credit. Assume all other seller costs and risks are identical.

1. Offer A's simple price after the stated credit is $490,000 before other deductions.
2. Offer B's comparable amount is $500,000.
3. The higher headline price produces $10,000 less on the supplied terms.

Answer: Offer B produces the higher simple seller net before other costs.

A contract price is not yet a sale price

Scenario: Buyer and seller sign at $425,000. Inspection leads to a $10,000 price amendment, and the transaction closes at $415,000.

1. The original contract price was $425,000.
2. The parties changed the agreement before closing.
3. The final sale price is $415,000, subject to verification of any other credits or property included.

Answer: Use $415,000 as the final closed price, not the superseded original amount.

Personal property inflates the package price

Scenario: A furnished lake house sells for $780,000, including boats and movable furniture independently valued at $55,000.

1. The $780,000 package includes real and personal property.
2. A real-property comparison must separate the non-realty component.
3. Before any other adjustment, the stated allocation suggests $725,000 for the realty portion.

Answer: Do not compare the entire $780,000 package to unfurnished real-property sales.

A price above appraisal creates extra cash need

Scenario: The contract price is $520,000, the accepted appraised value is $500,000, and the lender permits an 80% LTV based on the lower figure. Ignore other closing costs.

1. The lender's value base is $500,000 under the supplied rule.
2. Eighty percent supports a $400,000 loan.
3. The buyer needs $120,000 toward price, consisting of $100,000 base equity plus the $20,000 appraisal gap.

Answer: The maximum stated loan is $400,000, leaving $120,000 of buyer price cash.

A family price gets limited market weight

Scenario: Two siblings transfer a property for $300,000 after no public marketing. Similar arm's-length sales range from $390,000 to $410,000.

1. The sale is a real transaction but involves related parties and limited exposure.
2. The relationship and motivation may explain the lower number.
3. The analyst verifies the transaction but does not treat it as direct proof of typical market price.

Answer: The $300,000 price should not automatically control market-value analysis.

A median increase comes from mix

Scenario: One quarter has mostly small-home sales with a $350,000 median. The next has many luxury-home closings and a $430,000 median, while matched repeat-sale evidence is flat.

1. The median summarizes the middle transaction in each different sample.
2. A shift toward luxury sales can raise the median without each property appreciating.
3. Repeat-sale, segment, size, location, and price-tier analysis is needed.

Answer: The higher median alone does not prove every home gained 22.9%.

A builder incentive requires verification

Scenario: A new home closes at $600,000 with a large rate buydown, upgraded appliances, and prepaid association dues. Resales receive no similar benefits.

1. The headline price packages several economic incentives.
2. Fannie Mae guidance requires analysis of concessions and upgrades in comparable builder sales.
3. The appraiser measures market-supported adjustments and compares like terms.

Answer: The $600,000 closing should not be used unadjusted against sales without similar incentives.

1. What is market price?

1. The amount agreed to or paid in a specific transaction
2. Every asking price
3. Always the appraised value
4. The assessed value after exemptions

2. What is list price?

1. The seller's current asking amount
2. The closed transaction amount
3. The seller's net proceeds
4. The loan balance

3. An accepted price is later amended before closing. Which amount is the final sale price?

1. The final amount reflected in the completed transaction
2. Always the first offer
3. Always the first list price
4. Always the tax value

4. Which sale is most likely arm's length?

1. A publicly marketed sale between unrelated, typically motivated parties
2. A parent gifting equity to a child
3. A transfer between controlled affiliates
4. A forced transfer without marketing

5. A $500,000 offer includes a $25,000 seller credit. What is the simple price after that credit before other costs?

1. $475,000
2. $500,000
3. $525,000
4. $25,000

6. Does every $10,000 concession require an automatic $10,000 appraisal adjustment?

1. No, the adjustment should reflect verified market reaction
2. Yes, without analysis
3. Yes, but only for cash buyers
4. No, concessions never matter

7. What is an appraisal gap?

1. Contract price above the appraised value used for financing
2. Sale price below list price in every case
3. The seller's mortgage payoff
4. A property-tax exemption

8. For a standard Fannie Mae purchase transaction, what value generally enters the LTV denominator?

1. The lower of sales price or current appraised value
2. Always the higher figure
3. Always list price
4. Always assessed value

9. Why can a median sale price rise without every property appreciating?

1. The mix of properties sold can shift toward higher-priced homes
2. Median always equals appreciation
3. Every buyer pays the median
4. Sale volume never changes

10. What Illinois record helps verify transfer consideration and special sale conditions?

1. PTAX-203 transfer declaration
2. A zoning variance
3. A building permit only
4. A mortgage amortization table