Water and wastewater service are adequate, and qualified review confirms electricity can serve the planned residence’s heating, cooking and other loads. Natural gas is unavailable. What follows?
Correct Answer
C) Lack of gas does not bar it; weigh costs and market appeal
The stipulated adequate electric alternative means absence of natural gas alone does not prevent the proposed residential use. Actual operating and installation costs, utility capacity, regulations and market acceptance still matter. Do not assume a universal negligible price effect, automatic zoning relief or a rule that all residences require public sewer rather than an adequate approved alternative.
Why This Is the Correct Answer
Option C is correct because qualified review confirms electricity can serve the residence's heating, cooking and other loads, so lack of natural gas alone does not prevent the proposed use. The appraiser still weighs installation and operating costs, utility capacity, regulations and market acceptance. Fannie Mae expects competitive utilities, so the market's reaction matters.
Why the Other Options Are Wrong
Option A: The project cannot proceed without a natural gas connection
Option A, saying the project cannot proceed without a natural gas connection, is wrong because the facts state that electricity can adequately serve the residence's heating, cooking and other loads.
Option B: A zoning variance is required before the project can proceed
Option B, saying a zoning variance is required before the project can proceed, is wrong because utility availability is not a zoning variance issue, and nothing in the facts shows the use needs zoning relief.
Option D: Its market value equals that of the gas-served homes nearby
Option D, saying its market value equals that of the gas-served homes nearby, is wrong because the market may react to the lack of gas, and any price effect must be measured with market evidence rather than assumed to be zero.
Alternative works, market decides value
An adequate substitute utility keeps the use feasible, but the market still decides whether it affects price.
How to use: Use this when a stem removes one utility but supplies a working alternative.
Exam Tip
Separate feasibility from value: an adequate alternative supports feasibility, while value effects still need market evidence.
Common Mistakes to Avoid
- -Assuming a home cannot be built without natural gas
- -Assuming no price effect without market evidence
- -Treating utility availability as a zoning variance matter
Concept Deep Dive
Analysis
This question tests how the absence of one utility affects a proposed residential use when an adequate alternative exists. The stem stipulates adequate water, wastewater and electric service for all of the residence's loads. The reasoning is that lack of natural gas alone does not bar the use, but costs and market acceptance still need analysis.
Background Knowledge
Utilities affect a site's usability and marketability. When a typical utility is unavailable, the appraiser considers whether an adequate alternative exists and how the market reacts to it. Fannie Mae expects properties to have competitive utilities and other amenities typical for the market.
Real-World Application
An appraiser values a proposed all-electric home in an area where most homes use natural gas. The appraiser confirms adequate electric service, then compares sales of all-electric and gas-served homes to see whether buyers pay differently.
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