A home’s neighbor operates a noisy auto salvage yard. What does Fannie Mae require the appraiser to consider?
Correct Answer
A) Present or anticipated adjoining uses that may hurt value or marketability
The appraiser must consider the present or anticipated use of any adjoining property that may adversely affect the value or marketability of the subject property.
Why This Is the Correct Answer
Option A is correct because Fannie Mae requires the appraiser to consider the present or anticipated use of any adjoining property that may adversely affect the subject's value or marketability. A noisy salvage yard next door is such a use.
Why the Other Options Are Wrong
Option B: Uses within the subject’s own lot lines, rather than neighboring uses
Option B, uses within the subject's own lot lines rather than neighboring uses, is wrong because the requirement specifically covers adjoining property, not just the subject site.
Option C: Adjoining uses, provided they violate the local zoning code
Option C, adjoining uses only if they violate local zoning, is wrong because a legal adjoining use can still hurt value or marketability and must be considered.
Option D: Adjoining uses, if the borrower objects to them in writing
Option D, adjoining uses only if the borrower objects in writing, is wrong because the appraiser's duty to consider adverse adjoining uses does not depend on any borrower complaint.
Look over the fence
Check what is happening, or planned, on the neighboring property and ask whether it could hurt value or marketability.
How to use: Use this reminder whenever a stem mentions a neighboring use.
Exam Tip
Be wary of options that add conditions, such as a zoning violation or a borrower complaint, to the duty to consider adverse adjoining uses.
Common Mistakes to Avoid
- -Ignoring a legal but adverse adjoining use
- -Considering only current uses and not anticipated ones
- -Limiting analysis to the subject's own lot
Concept Deep Dive
Analysis
This question tests a Fannie Mae requirement on adjoining uses. A noisy salvage yard next door is an adjoining use that may hurt the subject's value or marketability. Fannie Mae requires the appraiser to consider present or anticipated adjoining uses with such effects, without conditions about zoning or borrower objections.
Background Knowledge
External influences such as nearby industrial uses, traffic or noise can affect value and marketability. Appraisers identify these influences and, where the market shows an effect, reflect it in the analysis and comparable adjustments. Both current uses and anticipated uses of adjoining property are relevant.
Real-World Application
An appraiser inspecting a house hears machinery from a salvage yard next door. The appraiser describes the adjoining use, looks for sales near similar uses to measure any market reaction and comments on its effect on marketability.
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