For a waterfront subject, an adjacent waterfront neighborhood is verified competitive. The 18 month-old same-street sale needs an unsupported time adjustment after sharp market movement. The recent same-street sale is substantially larger with an unsupported size adjustment. Which listed sale is the best-supported initial candidate, assuming its other material differences are adequately supported?
Correct Answer
D) A similar waterfront home sold 4 months ago in an adjacent area
The adjacent waterfront sale is a close competitive substitute with supported comparability. The inland sale lacks the relevant waterfront feature; the same-street larger sale needs an unsupported size adjustment; the older sale is explicitly unsupported for intervening market movement. A shared street or newer date alone does not overcome material evidence limitations.
Why This Is the Correct Answer
Option D is correct because the adjacent-neighborhood sale is waterfront, recent, similar, and located in a market area verified as competitive. Fannie Mae allows sales from competing market areas when they are the best comparables available, and this sale avoids the unsupported time and size adjustments the other candidates need.
Why the Other Options Are Wrong
Option A: A similar home sold 18 months ago on the same street
Option A, the similar home sold 18 months ago on the same street, would need a time adjustment that the stem says is unsupported after sharp market movement. Sharing a street does not overcome that evidence gap.
Option B: A similar home sold 2 months ago located 5 miles inland
Option B, the similar home sold 2 months ago 5 miles inland, lacks the waterfront location that is a key feature of the subject. Its recent date does not make up for missing that material characteristic.
Option C: A much larger waterfront home sold 1 month ago on the same street
Option C, the much larger waterfront home sold 1 month ago on the same street, would need a size adjustment that has no market support. Being recent and on the same street does not resolve that material difference.
Features first, then support
Pick the sale that shares the key value feature and whose remaining differences can be supported, even if it is not the nearest or newest.
How to use: Use this when an exam question lists several imperfect comparables.
Exam Tip
Do not default to the same-street or most recent sale; check which candidate shares key features and avoids unsupported adjustments.
Common Mistakes to Avoid
- -Assuming a same-street sale is the best comparable regardless of other differences
- -Choosing the most recent sale even though it lacks a key feature such as waterfront
- -Using a sale that needs an adjustment the appraiser cannot support
Concept Deep Dive
Analysis
This question tests comparable selection when each candidate has trade-offs. The best candidate is the one sharing the subject's key value feature (waterfront) whose differences can be supported, rather than the one that is closest geographically or most recent. Unsupported adjustments and missing key features weaken comparability.
Background Knowledge
The degree of comparability between a sale and the subject determines which adjustments are needed and how large they are. Good comparables share the subject's most important value features and require adjustments that market evidence can support; sales from competing neighborhoods can be appropriate when they are the best available.
Real-World Application
An appraiser valuing a lakefront home finds that the only same-street sales are either old or much larger. A verified sale of a similar lakefront home in the next neighborhood, which competes for the same buyers, becomes the primary comparable, and the appraiser explains the selection in the report.
More Sales Comparison Questions
Market analysis confirms that seller financing at 3%, versus a 6% market rate, increased a comparable sale price. What adjustment removes that financing premium?
At the same effective date, reliable value indications support $800,000 for continued use of a property as improved and $500,000 for its cleared site. Immediate demolition costs $100,000. These are the only feasible alternatives, with no other costs or timing differences. Which alternative has the higher net value?
Other relevant conditions equal, growth in the number of households with effective purchasing power in a market tends to have which effect?
In a lakefront market, paired sales show that direct water frontage has the largest price effect of any feature. Which approach to comparable selection best follows from this evidence?
Which circumstance can cause highest and best use as improved to differ from highest and best use as though vacant?
A small group of buyers in a market looks for specialized features that are uncommon in the broader housing supply. What term describes this group?
A neighborhood analysis should include all of the following EXCEPT:
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Market evidence isolates a subject value loss from off-site landfill odors. Which listed cause is an external-obsolescence influence?
Which proposed use cannot pass the legal-permissibility screen without evidence that the necessary permission is reasonably probable?
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