Which of the following is NOT a characteristic of selecting comparable sales?

Selecting comparable sales is a crucial aspect of property valuation, particularly in the context of appraisals or market analysis. The correct answer highlights a common misconception about comparables.

When assessing comparable properties, it is not required that they be identical to the subject property. In fact, perfect identicality is nearly impossible in real estate. Comparable properties should be similar in relevant characteristics like size, location, condition, and features; however, minor differences are acceptable and expected. Appraisers typically allow for variations, adjusting values based on these differences, as long as the properties remain in the same market segment and appeal to similar buyers.

The other characteristics mentioned—transactions that are arms-length, those occurring under normal conditions, and properties being substitutes—are essential in defining comparables. Arms-length transactions ensure that the sale reflects true market value rather than internal or contrived pricing. Normal conditions signify that there were no undue pressures influencing the sale, like foreclosure or distress. Substitutability is vital because it reinforces the idea that buyers would consider these properties similar enough to each other when making purchasing decisions. Therefore, understanding that comparables need not be identical but rather sufficiently similar is key to effective valuation in real estate.