MarketMEDIUM13.6% of exam

A neighborhood shows declining values and marketing times over six months. What must the appraiser provide in a Fannie Mae report?

Correct Answer

D) Conclusions on the reasons for the decline and long marketing

The appraiser must provide conclusions on the reasons a neighborhood is experiencing declining values, an over-supply of properties or marketing times over six months.

Answer Options

A statement that these conditions are typical for the area

A downward adjustment of 10% to each comparable in the grid

Nothing beyond checking the boxes on the form

Conclusions on the reasons for the decline and long marketing

Why This Is the Correct Answer

Option D is correct because Fannie Mae requires the appraiser to provide conclusions for the reasons a neighborhood is experiencing declining property values, an over-supply of properties, or marketing times over six months. Here values are declining and marketing times exceed six months. The appraiser must explain why.

Why the Other Options Are Wrong

Option A: A statement that these conditions are typical for the area

Option A is wrong because a statement that these conditions are typical for the area does not explain the reasons for the decline and long marketing times, which is what Fannie Mae requires.

Option B: A downward adjustment of 10% to each comparable in the grid

Option B is wrong because a downward adjustment of 10% to each comparable is an arbitrary figure, and it is not the required reporting element. Any adjustment needs market support.

Option C: Nothing beyond checking the boxes on the form

Option C is wrong because checking boxes on the form is not enough. Fannie Mae requires the appraiser to provide conclusions on the reasons for these conditions.

Declining? Explain why

When values fall, supply piles up or marketing exceeds six months, the report must say why.

How to use: Use this when a question asks what Fannie Mae requires in a declining or oversupplied neighborhood.

Exam Tip

Answers that offer only a checkbox or a flat percentage adjustment do not satisfy an explanation requirement.

Common Mistakes to Avoid

-Checking the declining box without commentary
-Applying a flat percentage adjustment instead of analyzing the market
-Describing conditions as typical without explaining causes

Concept Deep Dive

Analysis

This question tests a Fannie Mae reporting requirement. When a neighborhood shows declining values, oversupply or marketing times over six months, the appraiser must explain the reasons. Checking boxes or applying a flat adjustment does not meet the requirement.

Background Knowledge

Neighborhood analysis on Fannie Mae reports includes property values, demand and supply, and marketing time trends. Adverse trends draw closer attention from lenders, so the appraiser is expected to explain them. Explanations should rest on market data such as inventory, sales and economic conditions.

Real-World Application

An appraiser finds that a neighborhood's values have fallen and homes now take seven months to sell after a large employer closed. In the report, she explains the job losses and rising inventory as the reasons for the decline.

Fannie Maedeclining valuesmarketing timeoversupplyneighborhood analysis

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