A paired sales analysis yields an adjustment of −$15,000 for a property located on a busy arterial street. Later, the appraiser discovers that all three paired properties with arterial exposure also had 20% smaller lots than their non-arterial counterparts — a difference not initially controlled for. What is the most appropriate action to address the confounding?
Correct Answer
D) Re-analyze the pairs to isolate the arterial impact, or discard the pairs if adequate control is impossible
Because lot size and street exposure move together in the selected pairs, the observed difference does not isolate street influence. Obtain adequate controls or more suitable evidence before estimating the street component. Merely adding a caveat or increasing the number mechanically does not resolve identification; fitting regression to the same confounded data is not an automatic cure.
Why This Is the Correct Answer
Because lot size and street exposure move together in the selected pairs, the observed difference does not isolate street influence. Obtain adequate controls or more suitable evidence before estimating the street component. Merely adding a caveat or increasing the number mechanically does not resolve identification; fitting regression to the same confounded data is not an automatic cure.
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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A comparable's recorded price includes a $9,000 credit for repairs the buyer agreed to complete. The appraiser should:
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Three comparables have been selected for a 2,050-sf home built in 1996 on a 7,800-sf site: Sale 1, 1,880 sf, built 1992, 8,400-sf site; Sale 2, 2,240 sf, built 2001, 8,900-sf site; Sale 3, 2,120 sf, built 1999, 9,300-sf site. Which elements of comparison do these sales bracket?