A property is unique and has no truly comparable sales. What does Fannie Mae require of the appraiser?
Correct Answer
A) Use the best indicators, with market-supported adjustments
When there are no truly comparable sales because of uniqueness, the appraiser must select the best indicators of value and make market-supported adjustments reflecting the actions of typical purchasers.
Why This Is the Correct Answer
Option A is correct because Fannie Mae directs the appraiser to select sales that are the best indicators of value for the subject and to make market-supported adjustments. Those adjustments should reflect how typical purchasers in that market would react to the differences. The lack of ideal comparables changes the selection, not the obligation to analyze sales.
Why the Other Options Are Wrong
Option B: Use the cost approach and omit the sales comparison
Option B is wrong because the guidance does not tell the appraiser to drop the sales comparison and rely on the cost approach. The appraiser is expected to use the best available sales and adjust them with market support.
Option C: Use sales of identical homes from another state
Option C is wrong because using sales of identical homes from another state ignores the market in which the subject competes. The guidance calls for adjustments that reflect typical purchasers in that market, which distant out-of-state sales would not represent.
Option D: Decline the assignment as one that cannot be appraised
Option D is wrong because a unique property is not treated as one that cannot be appraised. Fannie Mae expects the appraiser to complete the analysis using the best indicators of value and supported adjustments.
Best Available, Market Adjusted
Think "best comps, backed adjustments": when nothing matches, pick the closest evidence and support each change with market data.
How to use: Use this phrase whenever a question describes a unique property with no truly comparable sales.
Exam Tip
When a question says comparables are scarce, look for the answer that keeps the sales comparison approach and stresses market-supported adjustments rather than abandoning or declining the work.
Common Mistakes to Avoid
- -Assuming a unique property requires the cost approach alone
- -Declining the assignment because no identical sales exist
- -Pulling identical-looking sales from a different market without regard to local buyer behavior
Concept Deep Dive
Analysis
This question tests what Fannie Mae expects when a subject is so unusual that no truly comparable sales exist. The key is that uniqueness does not excuse the appraiser from the sales comparison approach. Instead, the appraiser works with the best available evidence and supports the adjustments with market behavior.
Background Knowledge
The sales comparison approach relies on sales that compete with the subject in its market. When the subject is unusual, the appraiser broadens the search and relies more heavily on well-supported adjustments to bridge the differences. The goal is to mirror how typical buyers in that market would value the differences.
Real-World Application
An appraiser is asked to value a converted lighthouse keeper's home in a small coastal town. No similar conversions have sold, so the appraiser selects the most relevant waterfront and historic home sales in the area. Each difference is adjusted using market evidence and explained in the report.
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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