A comparable sold to a tenant already occupying the property. This transaction may require:
Correct Answer
B) Analysis of whether the tenant paid a typical price
Investigate the rights conveyed, lease terms, motivations, exposure and price relative to the relevant market. A tenant purchase may occur on market terms or involve a supported premium or discount. Occupancy alone fixes neither direction nor amount and does not require automatic exclusion. Apply only adjustments supported by the actual evidence.
Why This Is the Correct Answer
Option B is correct because a tenant purchase may have occurred on market terms or at a premium or discount, so the appraiser investigates the rights conveyed, lease terms, motivations, exposure and price relative to the market. Only that analysis can show whether an adjustment is needed and how large it should be.
Why the Other Options Are Wrong
Option A: Automatic exclusion from the comparable set
Option A calls for automatic exclusion from the comparable set. A sale to a tenant can still be a market-level transaction, so it should be analyzed rather than excluded without investigation.
Option C: An upward adjustment for the occupancy
Option C calls for an upward adjustment for the occupancy. Tenant occupancy alone does not establish the direction or amount of any price effect; any adjustment must come from the evidence.
Option D: No consideration, since occupancy is irrelevant
Option D says the sale needs no consideration because occupancy is irrelevant. A tenant buyer's motivations and the existing lease can affect price, so the circumstances deserve investigation.
Investigate, don't assume
A special buyer is a reason to ask questions about the price, not a reason to throw the sale out or adjust by a set amount.
How to use: Use this for any atypical-buyer sale on the exam.
Exam Tip
Answers that call for analysis of whether the price was typical are generally stronger than answers that exclude or adjust a sale based on one fact.
Common Mistakes to Avoid
- -Excluding any sale to a tenant without investigating it
- -Assuming a tenant buyer pays a premium as a rule
- -Ignoring the lease and buyer motivation altogether
Concept Deep Dive
Analysis
This question tests how to treat a sale to an existing tenant. Such a sale is not automatically invalid, nor does occupancy set a fixed adjustment; the appraiser must investigate whether the price was typical of the market and adjust only for supported effects.
Background Knowledge
Conditions of sale address whether a transaction reflects typical market motivations and exposure. Sales between parties with an existing relationship, such as landlord and tenant, require verification of whether the price was influenced by that relationship or by the lease.
Real-World Application
An appraiser finds a comparable bought by the tenant who had rented it for years. Interviews and the listing history show the property was openly marketed and the tenant's offer matched other offers, so the appraiser uses the sale without a conditions-of-sale adjustment.
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
An appraiser is completing a retrospective appraisal of a house for an estate, with an effective date of March 1, 2026, the date of the owner's death. Comparable 3 went under contract on June 1, 2026, and closed on July 1, 2026, at $412,000. Paired resales of unchanged homes in the neighborhood show values rising at a simple rate of 0.5% per month from January through August 2026, while a county index for all property types rose 0.2% per month. The report is being written in November 2026. What is Comparable 3's time-adjusted price?
Next Question
Two verified otherwise-matched sales differ only in one bathroom and six months of market time. Sale A at $302,000 has fewer bathrooms; later Sale B with the extra bathroom is $311,000. Evidence supports a simple prorated 4% annual increase on the earlier price, with other material influences controlled. What bathroom contribution is indicated?