In appraisal, what does a PRD of 1.10 typically indicate?

A Price Ratio Deviation (PRD) of 1.10 indicates that appraisals might be skewed to favor higher-value properties. Specifically, a PRD greater than 1 suggests that the assessments of properties are likely overestimating their market value compared to actual sale prices. This scenario can arise in markets where there is a prevalence of inflated appraisals, reflecting potential biases in the appraisal process.

A PRD of 1.10 implies that, on average, properties are appraised at 10% higher than their sale prices, which can lead to concerns about equity in property valuation. This signifies potential issues in how appraisals are conducted, particularly if the intent is to maintain fair and accurate pricing across different property types and values. Understanding this measurement helps appraisers recognize trends that may indicate the need for adjustments or re-evaluation of methods used, especially to protect against systemic bias in the appraisal process.

In contrast, options suggesting that properties are fairly evaluated or that the readings fall within a compliance range do not align with the implications of a PRD above 1. Additionally, while a high-demand real estate market can influence appraisals, it does not inherently explain the elevated PRD. The focus here is on the