A comparable's listing history shows three price reductions before it sold. That history is:
Correct Answer
C) Useful evidence to analyze pricing and exposure in context
Verified listing and reduction history can inform pricing, exposure and market analysis. Reductions do not alone prove hidden defects or disqualify a sale, and the closing price does not render its marketing context irrelevant.
Why This Is the Correct Answer
Option C is correct because verified listing and price reduction history can inform the analysis of pricing, exposure and market conditions. Fannie Mae requires appraisers to analyze closed sales, contract sales and listings to identify differences that could affect value. The reductions are evidence to interpret in context, not a conclusion in themselves.
Why the Other Options Are Wrong
Option A: Proof that the property had undisclosed defects
Option A treats the reductions as proof of undisclosed defects. Reductions can reflect overpricing, market softening or seller motivation, so they do not alone prove hidden problems.
Option B: An automatic reason to reject the sale as a comparable
Option B calls the history an automatic reason to reject the sale. A sale with price reductions can still be a good comparable if it was an arm's-length market transaction.
Option D: Irrelevant once the sale has been recorded and closed
Option D calls the history irrelevant once the sale closed. Marketing history helps explain the final price and market conditions, so closing does not make it irrelevant.
Reductions tell a story
Price cuts are clues about pricing and exposure, not a verdict on the property.
How to use: Use this when deciding how a comparable's listing history should affect your analysis.
Exam Tip
Prefer answers that treat listing data as evidence to analyze over answers that treat it as proof or as irrelevant.
Common Mistakes to Avoid
- -Assuming price cuts prove hidden defects
- -Discarding a comparable only because it had price reductions
- -Ignoring listing history after a sale closes
Concept Deep Dive
Analysis
This question tests how listing history of a comparable is used. Price reductions reveal how the market responded to the asking price and exposure, which is useful context. They do not by themselves prove defects or disqualify the sale.
Background Knowledge
Listing history includes original list price, reductions, days on market and the final sale price. Comparing list and sale prices helps appraisers understand market trends and exposure time. This context supports market conditions analysis and comparable selection.
Real-World Application
A comparable listed at $420,000, cut its price three times and sold at $389,000 after 95 days. The appraiser notes it was initially overpriced, checks that the final price aligns with other sales, and uses the history to support her market trend analysis.
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
Four verified park-proximity pairs indicate $7,200, $6,800, $8,100 and $7,900. Recent listings suggest weaker buyer preference. Before reducing the mean by five percent, what must the appraiser establish?
Next Question
The subject home backs onto a four-lane arterial road. A comparable sale is on a quiet interior street. Market rents for similar homes are $2,400 per month on interior streets, $2,250 on collector streets and $2,150 backing onto the arterial. Recent sales of rented homes in the area were: Sale 1, $375,000, rented at $2,500 per month; Sale 2, $330,000, rented at $2,200 per month; Sale 3, a sale between relatives, $276,000, rented at $2,300 per month. By how much should the comparable's sale price be reduced for the road influence?