A builder sale from a competing new project is not yet in public records or the MLS. How must the appraiser verify it for a Fannie Mae report?
Correct Answer
C) By viewing the settlement statement and noting it in the report
When builder sales from competing projects are not available through traditional data sources, the appraiser must verify the sale from the settlement statement and indicate in the report that it was the document used. Verbal statements and list prices are not verification.
Why This Is the Correct Answer
Option C is correct because Fannie Mae requires that builder sales from competing projects not available through traditional data sources be verified from the applicable settlement statement, and the report must indicate that the settlement statement was the document used for verification.
Why the Other Options Are Wrong
Option A: By relying on the builder’s verbal statement of the sale price
Option A relies on the builder's verbal statement of the sale price. A verbal statement is not the settlement-statement verification Fannie Mae requires for these sales.
Option B: By using the builder’s advertised base price for that same model
Option B uses the builder's advertised base price for that model. An advertised base price is a list price and may not reflect upgrades, incentives or the actual contract price, so it does not verify the sale.
Option D: By assuming the price equals the average price in that project
Option D assumes the price equals the average price in the project. An assumed average is not verification of the specific sale, which must come from the settlement statement.
Settlement statement settles it
For unrecorded builder sales, the settlement statement is the verification document, and the report should name it.
How to use: Use this for questions on verifying new-construction comparables.
Exam Tip
When a sale is not in traditional data sources, look for the answer that uses a closing document rather than statements, list prices or averages.
Common Mistakes to Avoid
- -Accepting a builder's verbal price as verification
- -Using advertised base prices as sale prices
- -Failing to state in the report how the sale was verified
Concept Deep Dive
Analysis
This question tests Fannie Mae's verification requirement for builder sales from competing projects not yet in public records or the MLS. The appraiser must verify the sale from the settlement statement and say so in the report.
Background Knowledge
New construction sales often close before they appear in public records or the MLS. Because builder pricing may include incentives and upgrades, verifying the actual settlement figures helps ensure the comparable reflects the true transaction.
Real-World Application
Appraising a new home, an appraiser wants to use a recent closing in a competing subdivision that has not yet recorded. The appraiser obtains the settlement statement, confirms the price and concessions, and notes in the report that it was the verification source.
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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