Comparable sales should ideally be verified with:
Correct Answer
A) A party to the transaction, such as a broker or principal
Firsthand transaction participants or reliable closing documents can help verify terms, motivations and concessions, with independent corroboration as needed. Merely labeling a source primary does not guarantee accuracy. An assessment notice, AVM or photographs alone do not establish transaction terms.
Why This Is the Correct Answer
Option A is correct because sales or financing data should be obtained from parties associated with the transaction, such as the broker, buyer or seller, or a reliable data source. A party to the transaction has firsthand knowledge of terms, motivations and concessions. Independent corroboration can be added as needed.
Why the Other Options Are Wrong
Option B: The county assessor's published annual valuation notice
Option B, the county assessor's published annual valuation notice, reports an assessed value, not the actual transaction terms. It cannot confirm the price, concessions or motivations of the sale.
Option C: An automated valuation model's output
Option C, an automated valuation model's output, is a statistical estimate of value. It does not verify what happened in the actual sale.
Option D: The listing photographs archived online
Option D, listing photographs archived online, may show the property's appearance but do not establish the sale price, terms or concessions.
Ask someone who was there
The best confirmation comes from someone who took part in the deal.
How to use: Use this when asked which source best verifies a comparable sale.
Exam Tip
Choose sources with direct knowledge of the transaction over valuation estimates or property photos.
Common Mistakes to Avoid
- -Treating an assessed value as a sale verification
- -Relying on an AVM to confirm transaction terms
- -Assuming a source is accurate just because it is labeled primary
Concept Deep Dive
Analysis
This question tests how comparable sales should be verified. Verification aims to confirm price, terms, motivations and concessions. Reason through which source has firsthand knowledge of the transaction.
Background Knowledge
Verification confirms that a comparable's reported price and terms are accurate and that the sale was arm's length. Parties such as brokers, buyers and sellers can disclose concessions, financing and motivations not visible in public records. Reliable closing documents can also help, with corroboration when needed.
Real-World Application
Public records show a comparable's recorded sale price. The appraiser calls the buyer's agent and learns the seller paid part of the buyer's closing costs, which affects the sale's analysis.
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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Previous Question
An appraiser is ranking four sales against a subject in average condition on an interior street. All four homes are similar to the subject in size and sold within the last three months. Sale 1 was renovated and is on a similar interior street. Sale 2 was renovated and backs onto a highway. Sale 3 needs repairs and backs onto a golf course. Sale 4 needs repairs and is on a similar interior street. Market data do not measure the effect of either condition or location. Which sale can be ranked superior to the subject overall?
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