An appraiser has a choice between a closed sale that needs a nine-month time adjustment and a one-month-old sale that needs several other adjustments. What does Fannie Mae say?
Correct Answer
A) The older sale needing just a time adjustment may be better
Fannie Mae notes it may be appropriate to use a nine-month-old sale with a time adjustment rather than a one-month-old sale that requires multiple adjustments; the best comparables are not always the most recent.
Why This Is the Correct Answer
Option A is correct because Fannie Mae states it may be appropriate to use a nine-month-old sale with a time adjustment rather than a one-month-old sale that needs multiple adjustments. A sale needing only one supported adjustment can better reflect the subject. The best comparables are not always the most recent.
Why the Other Options Are Wrong
Option B: The one-month-old sale must be used because it is more recent
Option B is wrong because there is no requirement that the one-month-old sale be used simply because it is more recent. Fannie Mae recognizes that an older, more similar sale may be preferable.
Option C: Both must be excluded because each one needs adjustments
Option C is wrong because excluding both sales because each needs adjustments would leave little to compare. Adjustments are a normal part of the sales comparison approach.
Option D: Neither may be used unless it closed in the last 90 days
Option D is wrong because there is no rule that a comparable must have closed in the last 90 days. Fannie Mae's guidance explicitly contemplates using a nine-month-old sale with a time adjustment.
Similar beats recent
A slightly older but very similar sale can beat a fresh but very different one. Fewer adjustments mean fewer chances for error.
How to use: Use this phrase when a question weighs recency against similarity in comparable selection.
Exam Tip
Watch for options that set a fixed age limit or demand the newest sale; Fannie Mae focuses on the best comparables, not only the most recent.
Common Mistakes to Avoid
- -Assuming the most recent sale is the best comparable
- -Believing Fannie Mae imposes a 90-day closing limit
- -Rejecting comparables because they need adjustments
Concept Deep Dive
Analysis
This question tests Fannie Mae's view that the best comparables are not necessarily the most recent. A nine-month-old sale that needs only a time adjustment may be more similar to the subject than a one-month-old sale requiring several adjustments. Comparability, not just recency, guides selection.
Background Knowledge
Comparable selection balances recency, proximity and physical similarity. An older sale can be adjusted for market conditions using supported time adjustments, while a newer sale that differs in many ways adds more opportunities for adjustment error. Appraisers should choose the sales that best reflect the subject's market.
Real-World Application
An appraiser finds a nine-month-old sale of a nearly identical model in the same subdivision and a last-month sale across town with different size and quality. She uses the older sale with a supported time adjustment and explains why it is more comparable.
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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