Real Estate Appraisal Practice Exam

The Rule of Three emphasizes the importance of utilizing at least three comparables when preparing a Comparative Market Analysis (CMA). By selecting a minimum of three comparables, an appraiser or real estate professional can ensure that the analysis reflects a more balanced and accurate assessment of the property's value. This approach helps mitigate the risk of relying too heavily on a single data point, which could be an outlier or an atypical property. Using three comparables also allows for a broader perspective on market trends and behaviors, offering insights into how similar properties have performed in the market. This practice helps establish a reliable range of values, fostering confidence in the final valuation. While more comparables can enhance the analysis, the Rule of Three serves as a foundational guideline to ensure that a valuation is grounded in relevant market data without becoming overwhelming or convoluted.