Final answer:
In real estate appraisal using the sales comparison approach, a transaction between family members would require a non-arm's length transaction adjustment to reflect the true market value, as if it were sold in a competitive market.
Step-by-step explanation:
When using the sales comparison approach in real estate appraisal, a sale between family members would likely require a non-arm's length transaction adjustment.
This is necessary because sales between family members may not reflect the true market value of the property, as they often involve different motivations and terms than a sale between unrelated parties.
The appraiser would investigate how similar transactions between non-related parties would be priced and make adjustments to the sale price accordingly. These adjustments ensure that the final estimate of value is based upon what a typical buyer would pay a typical seller in an open and unrestricted market.
This step is crucial for reaching an accurate appraisal that reflects the home's value as if it were sold in a competitive market environment.