One competitive sale is nearby but older; another is recent but farther away. What should guide selection and reliance?
Correct Answer
C) Overall comparability and support for the necessary adjustments.
Compare overall competitive relevance and support for time, location and other differences. Neither recency nor distance is an automatic selection rule. Both observations may remain useful, and a search for better evidence depends on the actual appraisal problem.
Why This Is the Correct Answer
Option C is correct because the degree of comparability between a sale and the subject determines which adjustments are necessary and their size. An older nearby sale needs a time adjustment, and a recent distant sale may need a location adjustment. The appraiser relies on the sales whose overall comparability and adjustment support make them most reliable.
Why the Other Options Are Wrong
Option A: The most recent sale, before considering its location.
Option A picks the most recent sale before considering its location. Recency is one factor, but ignoring location could leave a large unsupported difference, so it is not an automatic rule.
Option B: The nearest sale, because location differences cannot be adjusted.
Option B picks the nearest sale on the claim that location differences cannot be adjusted. Location differences can be adjusted when supported by market evidence, and an older sale may need its own time adjustment.
Option D: Reject both until a property both near and recent appears.
Option D rejects both sales until a property both near and recent appears. Both sales may remain useful with supported adjustments, and whether to search further depends on the appraisal problem.
Overall fit beats one factor
Judge comparables by total similarity and how well you can support each adjustment, not by a single factor like date or distance.
How to use: Use this when choosing between sales that are each strong on a different factor.
Exam Tip
Options that make one factor an automatic rule are usually weaker than an option based on overall comparability and support.
Common Mistakes to Avoid
- -Treating the most recent sale as best regardless of location
- -Assuming location differences cannot be adjusted
- -Discarding usable sales that need supported adjustments
Concept Deep Dive
Analysis
This question tests judgment in selecting and weighting comparables when no sale is ideal on all factors. Neither recency nor proximity alone decides selection. The appraiser weighs overall comparability and how well the necessary adjustments, such as time and location, can be supported.
Background Knowledge
Comparable selection balances similarity in location, date of sale, physical characteristics and other elements. The more a sale differs, the more and larger the adjustments, and the more those adjustments need support. Reconciliation gives more weight to sales requiring fewer or better-supported adjustments.
Real-World Application
In a slow rural market, an appraiser has a sale next door from 14 months ago and a sale across town from last month. The appraiser uses both, supports a time adjustment for the older sale and a location adjustment for the distant one, and explains the weighting in reconciliation.
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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Previous Question
The subject is a duplex whose two units each have in-unit laundry hookups; its units are leased at $1,525 and $1,500 per month. Sale 3, an otherwise similar duplex, has no hookups; its units were leased at $1,450 and, to a long-time tenant, $1,300. Current market rents for similar two-bedroom units are $1,525 with hookups and $1,450 without. Duplex sales in the area show a monthly gross rent multiplier of 140. What is the amount of the laundry hookup adjustment to Sale 3?
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An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?