A subject is in a new subdivision where the builder is still selling homes. Under Fannie Mae, what must the comparable set include?
Correct Answer
A) At least one settled sale from inside the subdivision and one from outside it
For a new subdivision, the report must include at least one settled comparable from inside the subdivision and at least one from outside it; the third may be from either. This tests market acceptance both within and beyond the project.
Why This Is the Correct Answer
Option A is correct because Fannie Mae requires at least one settled comparable sale from the subject's subdivision and at least one settled comparable sale from outside it. The third comparable can come from either. A resale inside the project is preferable if it is verifiable and does not involve the subject builder.
Why the Other Options Are Wrong
Option B: Settled sales from inside the subdivision, all of them sold by the builder
Option B calls for settled sales only from inside the subdivision, all sold by the builder. That omits the required outside comparable, and the guidance actually prefers a verifiable resale that does not involve the builder.
Option C: Settled sales from outside the subdivision, to avoid any builder influence
Option C calls for settled sales only from outside the subdivision. That omits the required inside comparable, which is needed to show how the project itself is selling.
Option D: Three pending sales taken from the builder’s current price list
Option D uses three pending sales from the builder's current price list. The requirement is for settled sales from both inside and outside the subdivision, and a builder price list is not a set of closed transactions.
Inside one, outside one
For a new subdivision, picture one comparable inside the gate and one outside it.
How to use: Use this for Fannie Mae comparable rules in new subdivisions, condo projects or PUDs.
Exam Tip
For new projects, look for the answer requiring settled sales both from inside and from outside the project.
Common Mistakes to Avoid
- -Using only builder sales inside the project
- -Excluding all inside sales to avoid builder influence
- -Relying on pending sales or builder price lists
Concept Deep Dive
Analysis
This question tests Fannie Mae's comparable requirements for a new subdivision where the builder is still selling. The rule calls for comparables from both inside and outside the project. This shows whether the market accepts the subject's pricing within and beyond the subdivision.
Background Knowledge
In new projects, builder pricing and incentives can make inside sales less reliable as indicators of market value. Requiring sales from outside the project tests whether the broader market supports those prices. Requiring inside sales shows how the specific project is received.
Real-World Application
An appraiser values a new home in a subdivision where the builder is still active. The appraiser uses one closed sale from inside the subdivision, preferably a resale, one closed sale from a competing neighborhood, and a third from either area.
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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