Adjusted comparable prices are $402,000, $409,000 and $415,000. Under Fannie Mae guidance, which indicated value from the sales comparison approach would be unacceptable?
Correct Answer
C) $418,000
Fannie Mae requires the indicated value in the sales comparison approach to fall within the range of the adjusted sale prices of the reported comparables. $418,000 is above the highest adjusted price of $415,000.
Why This Is the Correct Answer
Option C is correct because $418,000 is above the highest adjusted comparable price of $415,000. Fannie Mae guidance requires the indicated value in the sales comparison approach to be within the range of the adjusted sales prices of the reported comparables.
Why the Other Options Are Wrong
Option A: $405,000
Option A, $405,000, falls between $402,000 and $415,000, so it is within the adjusted range and acceptable under the Fannie Mae guidance.
Option B: $409,000
Option B, $409,000, equals one of the adjusted comparable prices and lies within the $402,000 to $415,000 range, so it is acceptable.
Option D: $412,000
Option D, $412,000, sits between $402,000 and $415,000, so it is within the adjusted range and acceptable under the guidance.
Stay between low and high
For Fannie Mae work, the indicated value must sit between the lowest and highest adjusted comparable prices.
How to use: Mark the low and high adjusted prices first, then test each answer against that bracket.
Exam Tip
Read whether the question asks for the acceptable or the unacceptable value. Most choices here are inside the range, so the outlier is the answer.
Common Mistakes to Avoid
- -Using unadjusted sale prices to define the range
- -Choosing an in-range value when the question asks for the unacceptable one
- -Assuming USPAP itself imposes the within-range rule
Concept Deep Dive
Analysis
This question tests the Fannie Mae requirement that the indicated value from the sales comparison approach fall within the range of the comparables' adjusted sale prices. Identify the lowest ($402,000) and highest ($415,000) adjusted prices, then find the option outside that range.
Background Knowledge
After adjusting comparables, the appraiser reconciles the adjusted prices into a value indication. Fannie Mae's Selling Guide requires that this indication fall within the range of adjusted sale prices of the comparables reported. A result outside the range suggests the comparable set or adjustments may not represent the subject well.
Real-World Application
An appraiser preparing a report for a conventional loan reconciles three adjusted comparables. Before finalizing, the appraiser confirms the indicated value lies inside the adjusted range, as Fannie Mae guidance requires.
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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