A builder offers to combine a vacant-lot sale with the contract price for a new house (improvements only) to create a comparable. How does Fannie Mae treat this?
Correct Answer
B) It may not be created as a comparable; it may serve as additional support
Fannie Mae states that in no instance may the appraiser create comparable sales by combining vacant land sales with the contract price of a home. Such transactions cannot count toward the three required closed comparables, though they may be added as support with commentary.
Why This Is the Correct Answer
Option B is correct because Fannie Mae states that in no instance may the appraiser create comparable sales by combining vacant land sales with the contract purchase price of a home (improvements only). Such combinations cannot count toward the required closed comparables. They may be added as additional support with commentary.
Why the Other Options Are Wrong
Option A: It counts as a closed comparable if the lot and house closed in the same year
Option A is wrong because closing the lot and house in the same year does not make the combination count as a closed comparable. Fannie Mae does not permit creating comparables this way regardless of timing.
Option C: It counts as a closed comparable when no other new-construction sales exist
Option C is wrong because a lack of other new-construction sales does not let the combination count as a closed comparable. The prohibition applies in all instances, so the appraiser must find actual sales and may use the combination only as support.
Option D: It must be used as the primary comparable for construction-to-permanent loans
Option D is wrong because there is no requirement to use the combination as the primary comparable for construction-to-permanent loans. Fannie Mae prohibits creating comparables by combining land sales with improvement contract prices.
Lot plus house isn't a sale
Two separate numbers glued together are not a real transaction. They can support the analysis but cannot stand in for a closed comparable.
How to use: Use this phrase when a question proposes assembling a comparable from separate land and construction prices.
Exam Tip
When Fannie Mae wording says in no instance, conditional options that allow exceptions are wrong. Look for the answer that keeps the item as support only.
Common Mistakes to Avoid
- -Counting a combined lot-and-contract figure as a closed comparable
- -Believing a shortage of new-construction sales permits the combination
- -Thinking that closing the lot and house in the same year makes the combination acceptable
Concept Deep Dive
Analysis
This question tests Fannie Mae's rule on combining a vacant-lot sale with a home's improvements-only contract price. Fannie Mae does not allow an appraiser to create a comparable this way. The combined figure may only be included as additional support with commentary.
Background Knowledge
A comparable sale should reflect an actual transaction of a property similar to the subject. Adding a lot price to a builder's improvements-only contract does not show what a buyer paid for a completed house and lot in one market transaction, so it cannot substitute for a closed sale.
Real-World Application
For a new home in a young subdivision, a builder suggests adding a recent lot sale to the house contract price to create a comparable. The appraiser instead uses actual closed sales of completed homes and mentions the builder's figures only as additional support with commentary.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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