Fannie Mae expects comparables that closed within the last 12 months. When can an older sale be the better choice?
Correct Answer
D) When it is the best indicator, such as a nine-month sale needing a time adjustment
The Guide notes that the best comparables are not always the most recent: a nine-month-old sale with a time adjustment may be more appropriate than a one-month-old sale requiring multiple adjustments. Older sales used for that reason must be explained.
Why This Is the Correct Answer
Option D is correct because an older sale can be the better choice when it is the best indicator of value, such as a nine-month-old sale needing a time adjustment. Fannie Mae notes the best and most appropriate comparables may not be the most recent and gives that example compared with a one-month-old sale requiring multiple adjustments. The appraiser should explain why the older sale was used.
Why the Other Options Are Wrong
Option A: When the appraiser prefers fewer comparables in the grid for that assignment
Option A is wrong because an appraiser's preference for fewer comparables in the grid is not a basis for choosing an older sale. Selection depends on which sales best indicate the subject's value.
Option B: Whenever an older sale has a higher price than the more recent sales
Option B is wrong because a higher price is not a reason to choose an older sale over more recent ones. Picking sales by price rather than by comparability would bias the analysis.
Option C: When the lender asks for a sale that supports the contract price
Option C is wrong because a lender asking for a sale that supports the contract price is not a valid reason for selecting a comparable. Comparables are chosen for their ability to indicate value, not to reach a desired result.
Best beats newest
Recent is good, but best is better. A slightly older twin can outrank a brand-new stranger.
How to use: Use this phrase when a question asks whether an older comparable can be preferred over a recent one.
Exam Tip
Choose the answer tied to the sale's quality as an indicator of value. Options based on price, convenience or a party's desired result are not valid selection reasons.
Common Mistakes to Avoid
- -Rejecting any sale older than the most recent ones
- -Selecting comparables to support a contract price
- -Using an older sale without explaining the choice
Concept Deep Dive
Analysis
This question tests when an older comparable sale can be more appropriate than a more recent one under Fannie Mae guidance. Recency is preferred, but the best comparables are the ones that best indicate value. A slightly older sale needing only a time adjustment can beat a very recent sale needing many adjustments.
Background Knowledge
Fannie Mae expects comparable sales that closed within the last 12 months, but recognizes that the most similar sales are not always the most recent. Appraisers weigh recency against similarity and the number and size of adjustments needed, and explain their choices in the report.
Real-World Application
An appraiser finds a nine-month-old sale of a nearly identical home on the same block and a one-month-old sale of a much larger home across town. The appraiser uses the older sale with a supported time adjustment and explains why it is the better indicator.
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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