An appraiser believes, without market evidence, that a nearby group home lowers values. What does Fannie Mae require?
Correct Answer
A) Do not interject unsupported opinions about market forces
A characteristic may be considered only if market evidence shows it affects value or marketability. The appraiser must not make unsupported assumptions or interject personal opinion about market forces.
Why This Is the Correct Answer
Option A is correct because Fannie Mae states the appraiser must not make unsupported assumptions or interject personal opinion or perceptions about market forces. A characteristic is considered only if market evidence demonstrates that it affects value or marketability. Without that evidence, the appraiser's belief about the group home has no place in the analysis.
Why the Other Options Are Wrong
Option B: Make a 5% downward adjustment to reflect the perceived effect
Option B is wrong because a 5% downward adjustment for the perceived effect would be based on the appraiser's belief, not market evidence. Adjustments must reflect demonstrated market reactions.
Option C: Report the opinion, as long as it is clearly labeled as such
Option C is wrong because labeling an unsupported opinion does not make it acceptable. Fannie Mae prohibits interjecting personal opinion or perceptions about market forces.
Option D: Exclude all of the sales located near the group home
Option D is wrong because excluding all sales near the group home would apply the same unsupported belief through comparable selection. Without market evidence of an effect, there is no basis to exclude those sales.
Evidence in, opinion out
If the market data do not show it, it does not go in the report. Beliefs are not evidence.
How to use: Use this phrase when a question asks whether an appraiser may act on a perceived neighborhood influence.
Exam Tip
When the stem says without market evidence, the correct answer will not adjust for, report, or act on the belief. Look for the option that excludes unsupported opinion.
Common Mistakes to Avoid
- -Making an adjustment based on a personal perception
- -Believing a clearly labeled opinion is acceptable
- -Excluding comparables because of an unsupported belief
Concept Deep Dive
Analysis
This question tests Fannie Mae's rule against unsupported opinions about market forces. An appraiser's belief that a nearby group home lowers values, without market evidence, cannot be used in the valuation. Only characteristics shown by market evidence to affect value or marketability are considered.
Background Knowledge
Appraisals must rest on market evidence, not on assumptions or personal perceptions. Unsupported opinions about neighborhood characteristics can introduce bias, and Fannie Mae does not permit them to be interjected into the appraisal.
Real-World Application
An appraiser notices a group home a few doors from the subject. Before saying anything about it, the appraiser checks nearby sales and finds no measurable price effect, so the report does not suggest any impact.
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