A neighborhood mixes homes with small offices. How should the appraiser select comparables to reflect the effect of the mixed uses?
Correct Answer
A) From the same neighborhood when possible, adjusting any others
To make sure any positive or negative effects of mixed land uses are reflected, the appraiser should select comparables from within the same neighborhood whenever possible; otherwise neighborhood or location adjustments may be needed.
Why This Is the Correct Answer
Option A is correct because Fannie Mae says the appraiser should select comparable sales from within the same neighborhood whenever possible. That way any positive or negative effects of the mixed land uses are reflected in the analysis. Sales from elsewhere may need neighborhood or location adjustments.
Why the Other Options Are Wrong
Option B: From neighborhoods with no commercial uses, to avoid any adjustment
Option B is wrong because choosing sales from neighborhoods with no commercial uses would miss the effect of the mixed uses on the subject. The guidance favors sales from within the same neighborhood.
Option C: From commercial sales in the neighborhood, since uses are mixed
Option C is wrong because using commercial sales from the neighborhood would compare a home with properties of a different use. The guidance calls for comparable home sales from within the same neighborhood.
Option D: From any area, since land use does not affect home values
Option D is wrong because it claims land use does not affect home values and allows sales from any area. Mixed land uses can have positive or negative effects, which is why same-neighborhood sales are preferred.
Same Neighborhood, Same Influences
Sales from the same neighborhood carry the same land use influences as the subject.
How to use: Use this idea when a question asks how to account for neighborhood features in comparable selection.
Exam Tip
When a question mentions mixed uses or other neighborhood influences, look for the answer that selects comparables from within the same neighborhood when possible.
Common Mistakes to Avoid
- -Avoiding the subject's neighborhood to escape adjustments
- -Using commercial property sales as comparables for a home
- -Assuming nearby land uses do not affect home values
Concept Deep Dive
Analysis
This question tests how to capture the effect of mixed land uses in the sales comparison approach. Comparables from the same neighborhood already reflect whatever positive or negative influence the mixed uses have. When such sales are not available, other sales may need neighborhood or location adjustments.
Background Knowledge
Neighborhood land use patterns can influence residential values through convenience, traffic, noise and appeal. Sales from the same neighborhood capture these influences naturally. Sales from other areas may need location adjustments supported by market evidence.
Real-World Application
A subject home sits on a street with a dentist's office and a small insurance agency nearby. The appraiser selects home sales from the same blocks, which reflect the same influences. When she adds a sale from a purely residential area, she considers a location 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
A comparable sold for $400,000 including $12,000 of furniture. Market conditions then support a +5% adjustment. If the non-realty item is removed before the market conditions adjustment is applied, what is the price after these two steps?
Next Question
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