A rural subject has no truly comparable sales nearby, and the best indicators are a considerable distance away. Under Fannie Mae guidance, the appraiser may:
Correct Answer
D) Use the distant sales if credible, explaining why they were selected
For rural properties, comparables a considerable distance away can be used if they produce credible assignment results, and the appraisal must explain why they were selected. Closeness alone does not make a sale the best indicator.
Why This Is the Correct Answer
Option D is correct because Fannie Mae states that when the best indicators of value are a considerable distance away, those comparables can be used if they produce credible assignment results, and the appraisal must explain why they were selected.
Why the Other Options Are Wrong
Option A: Use the nearest sales, however dissimilar they are to the subject
Option A says to use the nearest sales however dissimilar they are. Proximity alone does not make a sale the best indicator, and very dissimilar sales may not produce credible results.
Option B: Decline the assignment, since distant sales are not permitted
Option B says to decline the assignment because distant sales are not permitted. Fannie Mae expressly permits distant comparables when they are the best indicators and produce credible results.
Option C: Use the distant sales without explaining why they were chosen
Option C says to use the distant sales without explaining why they were chosen. Fannie Mae requires the appraisal to include an explanation of why the particular comparables were selected.
Far is fine if explained
Distant comparables are acceptable when they are the best indicators and the appraiser explains the choice.
How to use: Use this for rural or unusual-property comparable questions.
Exam Tip
Look for the answer that combines permission to use the data with a duty to explain it.
Common Mistakes to Avoid
- -Assuming distance limits forbid distant comparables
- -Choosing nearby but very dissimilar sales
- -Omitting an explanation for unusual comparable choices
Concept Deep Dive
Analysis
This question tests Fannie Mae guidance on distant comparables in rural areas. Distant sales can be used when they are the best indicators and produce credible results, provided the appraiser explains why they were selected.
Background Knowledge
In rural areas sales are often sparse, and the most similar properties may be far from the subject. Credible assignment results depend on similarity and supportable adjustments, not just distance, and the report should explain the selection so users can follow the reasoning.
Real-World Application
An appraiser valuing a farmhouse on acreage finds no similar sales within ten miles. The appraiser uses three similar rural sales from neighboring towns and adds a comment explaining their selection and the market area they share with the subject.
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?
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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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