A protected greenbelt lies behind the house being appraised. A trainee proposes a $15,000 upward adjustment to two comparables that back onto other houses, taking the figure from a rule of thumb. Market data in the neighborhood do not isolate the greenbelt's effect through paired sales or any other measurement. What is the most appropriate treatment of this difference?
Correct Answer
B) Rate the comparables inferior in this element and analyze qualitatively
When the market data do not support a dollar or percentage amount, the appraiser can still recognize the direction of the difference: the comparables lack the greenbelt and are inferior in that element. Relative comparison analysis carries that rating into the overall ranking without inventing a number. A rule-of-thumb figure is not a market-based adjustment, ignoring a known difference is not analysis, and a builder's lot premium is a historic price set by the seller rather than a measure of today's market.
Why This Is the Correct Answer
Option B is correct because rating the comparables inferior for the greenbelt reflects the market fact that the subject has a feature they lack, without claiming a precision the data do not provide. The rating then feeds the overall ranking of each sale.
Why the Other Options Are Wrong
Option A: Keep the $15,000 adjustment as a common industry figure
Option A keeps the $15,000 rule-of-thumb figure. Fannie Mae's guide gives a rule-of-thumb adjustment as an example of an inappropriate one, because adjustments must reflect the market's reaction.
Option C: Leave the greenbelt out of the analysis because it is not measurable
Option C drops the greenbelt because it cannot be measured. Being unmeasurable in dollars does not make a difference irrelevant; qualitative analysis is the tool for exactly this case.
Option D: Use the builder's lot premium from the 2004 original sales
Option D uses the builder's lot premium from the 2004 original sales. That premium was set for new homes more than two decades ago, not measured from today's resale market, so it does not show what buyers pay for the greenbelt now.
No data, use direction
If the market will not tell you how much, it can still tell you which way.
How to use: Use it when a difference matters but no paired sales or other evidence measure it.
Exam Tip
Prefer an answer that reflects the difference qualitatively over one that plugs in an unsupported figure or ignores the difference.
Common Mistakes to Avoid
- -Using a rule-of-thumb adjustment without market support
- -Ignoring a difference because it cannot be measured in dollars
- -Treating historic builder premiums as current market adjustments
Concept Deep Dive
Analysis
The question tests why relative comparison analysis exists. It lets the appraiser account for a real difference when the data cannot support a quantitative adjustment, instead of either guessing a number or ignoring the difference.
Background Knowledge
Quantitative adjustments need data that isolate a difference. When such data are lacking, qualitative techniques compare sales as superior, similar or inferior and place the subject within the ranked array.
Real-World Application
An appraiser cannot find enough greenbelt and non-greenbelt pairs to measure the premium. The report explains that the comparables are inferior in this element and that the subject is placed toward the upper part of the bracket for that reason.
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 sold with seller financing at an interest rate well below the market rate for similar loans. What does that indicate for the comparable’s price?
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