An appraiser is analyzing Comparable 2 for a single-family home appraisal and notes four facts: (I) it went under contract five months before the effective date in a rising market; (II) it has 300 square feet more living area than the subject; (III) the seller carried a second mortgage for the buyer; (IV) it sits on a corner lot. Which facts are transactional elements of comparison?
Correct Answer
C) I and III
Transactional elements describe the sale itself: property rights conveyed, financing terms, conditions of sale, expenditures right after the sale and market conditions. The contract date in a changing market (I) and seller-carried financing (III) are both transactional. Living area (II) and a corner lot (IV) describe the real estate, so they are property elements; each wrong pair mixes in at least one of them.
Why This Is the Correct Answer
Option C is correct because the contract date in a rising market is a market conditions fact and the seller-carried second mortgage is a financing terms fact. Both describe the transaction rather than the house. The extra living area and the corner lot are property characteristics.
Why the Other Options Are Wrong
Option A: I and II
Option A pairs the market conditions fact (I) with the 300 square feet of extra living area (II). Living area is a physical characteristic of the house, so it is a property element, not a transactional one.
Option B: II and IV
Option B names the extra living area (II) and the corner lot (IV). Both describe the real estate itself, size and site location, so both are property elements and neither is transactional.
Option D: III and IV
Option D pairs the seller financing (III), which is transactional, with the corner lot (IV). A corner lot is a site and location characteristic, so it belongs with the property elements.
Deal facts versus house facts
If the fact would change had the same house sold on a different day, on different terms or to a different kind of buyer, it is a deal fact and therefore transactional. If it would stay the same, it is a house fact.
How to use: Use this test whenever a question lists mixed facts about a comparable and asks you to classify them.
Exam Tip
Market conditions (time) is grouped with the transactional elements even though it is not part of the contract; do not treat it as a property element.
Common Mistakes to Avoid
- -Treating market conditions (time) as a property element
- -Classifying location as transactional because it is fixed at the sale
- -Overlooking seller financing as a transactional difference
Concept Deep Dive
Analysis
The question tests whether the candidate can sort elements of comparison into the two groups the outline uses. Ask of each fact whether it describes the deal (date, terms, rights, motivation) or the physical and locational character of the house. Facts about the deal are transactional; facts about the real estate are property elements.
Background Knowledge
Elements of comparison are the categories of difference that can cause sale prices to vary. The transactional group covers property rights conveyed, financing terms, conditions of sale, expenditures made right after purchase and market conditions; the property group covers location, physical characteristics, economic characteristics and use. Transactional adjustments are usually made first, to the total sale price.
Real-World Application
An appraiser verifying a comparable with the listing agent learns the closing date, that the seller carried back a note, and confirms the size and lot from public records. In the grid she adjusts financing and market conditions first, then moves to the size and location lines.
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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