For a given property type, how many meaningful units of comparison may a market have?
Correct Answer
C) More than one, depending on the market
Depending on the market, there may be more than one meaningful unit of comparison for a given type of property.
Why This Is the Correct Answer
Option C is correct because, depending on the market, there may be more than one meaningful unit of comparison for a given type of property. The appraiser chooses units that reflect how buyers and sellers in that market price the property. Several units can be analyzed and compared for consistency.
Why the Other Options Are Wrong
Option A: One, set by the appraisal form in use
Option A says there is one unit set by the appraisal form in use. Units of comparison come from how the market prices the property, not from a form, and a market may have more than one meaningful unit.
Option B: Two, price per square foot and per room
Option B limits the answer to exactly two units, price per square foot and per room. The number and type of meaningful units depend on the market and may include other units, so a fixed pair is not the rule.
Option D: None, since units apply to income property
Option D claims none apply because units of comparison are only for income property. Units such as price per square foot are used for many property types, including residential and land.
Market picks the units
The market, not the form, tells you which units of comparison are meaningful, and there may be several.
How to use: Use this when a question asks how to choose or how many units of comparison to use.
Exam Tip
Be wary of options that fix a single unit or a set number of units regardless of the market.
Common Mistakes to Avoid
- -Assuming the appraisal form dictates the unit of comparison
- -Believing units of comparison apply only to income property
Concept Deep Dive
Analysis
This question tests understanding of units of comparison in the sales comparison approach. The market, not a form or a fixed rule, determines which units are meaningful. Depending on the market, more than one unit may be meaningful for the same property type.
Background Knowledge
A unit of comparison expresses sale prices in a common term, such as price per square foot, per acre or per unit, so sales of different sizes can be compared. The appropriate units are those the market uses. Analyzing more than one unit can help test the reliability of an indication.
Real-World Application
For a fourplex, an appraiser analyzes comparables by price per unit and price per square foot of building area. Both units are meaningful in that market, and the appraiser compares the two indications in reconciliation.
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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