A home lies under the approach path of an airport. Which market force does Fannie Mae classify this as?
Correct Answer
B) Environmental force
Environmental forces include a hazardous waste site on or near the property, proximity to an airport and the FEMA flood zone. Regulations, laws and taxes are governmental forces.
Why This Is the Correct Answer
Option B is correct because Fannie Mae lists the proximity of a property to an airport among the environmental forces that must be considered, along with hazardous waste sites and the FEMA flood zone.
Why the Other Options Are Wrong
Option A: Economic force
Option A, economic force, is wrong because economic forces relate to factors such as employment, income and financing, not physical surroundings like an airport approach path.
Option C: Governmental force
Option C, governmental force, is wrong because governmental forces involve regulations, laws and taxes; an airport's flight path near a home is grouped with environmental forces.
Option D: Social force
Option D, social force, is wrong because social forces relate to population characteristics and preferences, not to nearby airport activity.
Planes, flood, waste: environmental
Airports, flood zones and hazardous waste sites are the environmental examples to remember.
How to use: Use these three examples to classify physical surroundings questions.
Exam Tip
Physical surroundings and hazards go with environmental forces; laws and taxes go with governmental forces.
Common Mistakes to Avoid
- -Classifying airport proximity as a governmental force
- -Ignoring environmental forces when they do not appear on the site
- -Mixing up social and economic forces
Concept Deep Dive
Analysis
This question tests Fannie Mae's grouping of forces that affect value. Proximity to an airport is listed among environmental forces, along with hazardous waste sites and FEMA flood zones. The other forces cover economic conditions, regulations and demographic or social factors.
Background Knowledge
Appraisers commonly analyze four forces affecting value: social, economic, governmental and environmental. Environmental forces include physical surroundings and hazards such as flood zones, contamination and airport proximity. These factors may affect value and marketability and should be considered in the neighborhood analysis.
Real-World Application
An appraiser values a home directly under the final approach to a regional airport. The appraiser notes the environmental factor and compares sales of homes inside and outside the flight path to see whether buyers discount for noise.
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