A new condo project has no settled sales because the subject is one of the first units to sell. What may the appraiser use under Fannie Mae guidance?
Correct Answer
A) Two pending in-project sales in lieu of one settled, plus three outside
When there are no settled sales inside a new project because the subject is among the first to sell, the appraiser may use two pending sales in the project in lieu of one settled sale, and must also use at least three settled sales from outside the project.
Why This Is the Correct Answer
Option A is correct because Fannie Mae allows the appraiser to use two pending sales in the subject project in lieu of one settled sale. The appraiser must also use at least three settled comparable sales from outside the project. Option A matches both parts of that guidance.
Why the Other Options Are Wrong
Option B: The developer’s current list prices in place of all closed sales
Option B is wrong because it uses the developer's current list prices in place of all closed sales. Fannie Mae's guidance relies on pending sales in the project plus at least three settled outside sales, not list prices alone.
Option C: Settled sales from outside the project alone, without further comment
Option C is wrong because it relies on settled sales from outside the project alone, without further comment. The guidance pairs outside settled sales with in-project pending sales, and leaving out any discussion of the in-project data ignores the most directly competing evidence.
Option D: The subject’s own contract price as one of the three closed comparables
Option D is wrong because it uses the subject's own contract price as one of the three closed comparables. The subject's pending contract is the transaction being appraised, and it is not an independent settled comparable sale.
Two pending equal one settled
In a new project with no closings, two in-project pending sales can stand in for one settled sale, plus at least three settled sales from outside.
How to use: Use this when a question describes the first sales in a new condo or PUD project.
Exam Tip
Look for the answer that combines in-project pending sales with at least three outside settled sales.
Common Mistakes to Avoid
- -Using developer list prices instead of closed sales
- -Using the subject's own contract as a comparable
- -Ignoring in-project pending sales
Concept Deep Dive
Analysis
This question tests Fannie Mae's guidance for a new project where the subject is among the first units to sell, so there are no settled sales inside the project. The appraiser may substitute two pending sales in the project for one settled sale, and must also use at least three settled sales from outside the project. The answer combines in-project pending data with outside closed sales.
Background Knowledge
In new projects, the most similar evidence is often sales inside the same project, but early in sell-out there may be no closings yet. Pending contracts in the project show current pricing, while settled sales from competing projects provide closed-sale support.
Real-World Application
An appraiser is valuing one of the first units in a new condo building with no closed sales yet. She includes two pending contracts from the building and three closed sales from a similar nearby project.
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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All other price influences are controlled, and market analysis supports positive price contributions for each characteristic in which a comparable is superior to the subject. What direction applies to those comparable adjustments?
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