A home is unusual and few sales occur nearby. What does Fannie Mae say about using properties that are not truly comparable?
Correct Answer
A) They may be the best available and most appropriate for the analysis
Where truly comparable sales are scarce, the appraiser might need to use properties that are not truly comparable; in some situations they are simply the best available and most appropriate for the analysis.
Why This Is the Correct Answer
Option A is correct because Fannie Mae states that in some situations properties that are not truly comparable may simply be the best available and the most appropriate for the appraiser's analysis. Scarcity of ideal sales does not prevent completing the appraisal.
Why the Other Options Are Wrong
Option B: They may not be used, and the appraisal must be declined
Option B says such properties may not be used and the appraisal must be declined. Fannie Mae recognizes that less comparable properties may be the best available, so declining is not required.
Option C: They may be used without adjustment, since none are similar
Option C says they may be used without adjustment because none are similar. Dissimilar properties generally need more analysis and adjustment, not less.
Option D: They may be used if the lender signs a waiver of the guidelines
Option D says they may be used only if the lender signs a waiver of the guidelines. Fannie Mae's guidance itself permits their use when they are the best available, and no waiver is described.
Best available beats none
When perfect comparables do not exist, the best available sales, carefully adjusted and explained, are acceptable.
How to use: Use this for questions about unique homes or thin markets.
Exam Tip
Watch for answers that invent waivers or require declining the assignment; Fannie Mae's guidance allows the best available data.
Common Mistakes to Avoid
- -Declining assignments simply because ideal comparables are lacking
- -Using dissimilar sales without adjustments
- -Believing a lender waiver is needed to use less similar sales
Concept Deep Dive
Analysis
This question tests Fannie Mae guidance on unusual properties with limited comparable data. Properties that are not truly comparable may be the best available and most appropriate data, so the appraiser can use them with appropriate analysis.
Background Knowledge
Unique or unusual properties often have few directly comparable sales. Appraisers then use the best available data, apply supported adjustments and explain their reasoning so the report remains credible.
Real-World Application
An appraiser values a converted church residence with no similar sales nearby. The appraiser uses the closest available single-family sales, adjusts for supported differences, and explains why these were the best data available.
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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A rural subject has no truly comparable sales nearby, and the best indicators are a considerable distance away. Under Fannie Mae guidance, the appraiser may:
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