An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Correct Answer
C) Describe the boundaries by north, south, east and west
Fannie Mae requires the boundaries to be clearly delineated using north, south, east and west, using features such as streets or waterways. A map or addendum may not be the only description.
Why This Is the Correct Answer
Option C is correct because Fannie Mae states that the neighborhood boundaries should be clearly delineated using 'North', 'South', 'East' and 'West'. Those boundaries may include streets, legally recognized neighborhood boundaries, waterways or other natural boundaries. This gives a reader a clear written outline of the neighborhood.
Why the Other Options Are Wrong
Option A: Attach a map and refer to it as the only description
Option A attaches a map and refers to it as the only description. Fannie Mae says appraisers should not reference a map or other addendum as the only example of the neighborhood boundaries.
Option B: State that the neighborhood is “within one mile” of the subject
Option B describes the neighborhood as 'within one mile' of the subject. A radius does not delineate north, south, east and west boundaries based on features that separate one neighborhood from another.
Option D: Use the subject’s zip code as the boundary
Option D uses the subject's zip code as the boundary. A zip code is a postal area, not a delineation by north, south, east and west using features that define the neighborhood.
Compass, not circle
Describe a neighborhood with the four compass directions and real features like streets or rivers, not a radius, a zip code or a map alone.
How to use: Use this when answering how neighborhood boundaries should be written in a Fannie Mae report.
Exam Tip
When the stem cites Fannie Mae and neighborhood boundaries, look for the north, south, east and west description.
Common Mistakes to Avoid
- -Relying on an attached map as the sole boundary description
- -Defining the neighborhood by a mileage radius
- -Using a zip code as the neighborhood boundary
Concept Deep Dive
Analysis
This question tests Fannie Mae's guidance on describing neighborhood boundaries. Boundaries should be clearly delineated using north, south, east and west. They may use streets, legally recognized boundaries, waterways or natural features, and a map or addendum should not be the only description.
Background Knowledge
A neighborhood is an area of complementary land uses that share similar influences on value. Defining its boundaries helps the appraiser and the reader understand the market area from which comparables are drawn. Fannie Mae asks for a written north, south, east and west outline tied to recognizable features.
Real-World Application
An appraiser writes that the neighborhood is bounded by Main Street on the north, the river on the south, the highway on the east and Oak Avenue on the west. A location map is attached as a supplement, not as the only description.
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?
Which of these is listed by Fannie Mae as a sales or financing concession?
A comparable went under contract two weeks before the effective date. What does Fannie Mae expect about a time adjustment?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
One competitive sale is nearby but older; another is recent but farther away. What should guide selection and reliance?
Next Question
A reviewer reads an appraisal of a 1920s bungalow in which differences in curb appeal, quality of finish, and street setting were analyzed by relative comparison rather than by dollar adjustments. Which content in the report lets the reviewer follow the appraiser's reasoning?