In a Fannie Mae appraisal of a 1,950-square-foot ranch home, the appraiser reconciled three adjusted sales, Sale 1 at $393,000, Sale 2 at $386,000 and Sale 3 at $396,000, to $390,000. Sale 2 sold for $392,000 and was recorded as 2,100 square feet, so it received a −$9,000 size adjustment at the market rate of $60 per square foot, plus +$3,000 for its older roof. A review finds Sale 2's living area was overstated by 200 square feet. Once Sale 2 is corrected, how does the $390,000 conclusion stand?
Correct Answer
B) It falls below the corrected range and must be reconciled again
Sale 2's actual living area is 2,100 − 200 = 1,900 square feet, 50 square feet smaller than the subject, so its size adjustment becomes +50 x $60 = +$3,000 and its corrected adjusted price is $392,000 + $3,000 + $3,000 = $398,000. The adjusted range is now $393,000 to $398,000, so the $390,000 conclusion falls below every adjusted sale. Fannie Mae requires the indicated value in the sales comparison approach to be within the range of the adjusted sales prices, so a comment cannot cure it; the appraiser must reconcile again. Correcting the area the wrong way, to 2,300 square feet, would put Sale 2 at $374,000 and leave the conclusion inside a $374,000 to $396,000 range, and giving Sale 2 less weight does not change the range at all.
Why This Is the Correct Answer
Option B is correct because Sale 2's true size is 1,900 square feet, 50 square feet smaller than the subject, so its size adjustment is +$3,000 and its adjusted price is $392,000 + $3,000 + $3,000 = $398,000. The adjusted range becomes $393,000 to $398,000, the $390,000 conclusion falls below it, and Fannie Mae requires the indicated value to be within that range, so the appraiser must reconcile again.
Why the Other Options Are Wrong
Option A: It stays within the corrected range and needs no change
Option A says the conclusion stays within the corrected range. That holds only if the area is corrected the wrong way, to 2,300 square feet, which would put Sale 2 at $392,000 − $21,000 + $3,000 = $374,000. The sale is 1,900 square feet, its adjusted price is $398,000, and the range now starts at Sale 1's $393,000, above $390,000.
Option C: It falls below the corrected range but may stand if explained
Option C sees that the conclusion is below the corrected $393,000 to $398,000 range but lets it stand with an explanation. Fannie Mae states that the indicated value in the sales comparison approach must be within the range of the adjusted sales prices, so the value has to be reconciled again, not just explained.
Option D: It stays within the corrected range, with less weight on Sale 2
Option D keeps the conclusion by giving Sale 2 less weight. Weighting does not move the range: once Sale 2 is recomputed at $398,000, the lowest adjusted price is $393,000 and $390,000 lies below it.
Fix the fact, redo the grid
Recompute the size difference from the corrected area, then check where the conclusion sits in the new range.
How to use: Use it whenever a review or new data changes a comparable's characteristics.
Exam Tip
Correct the comparable's area first, then size the adjustment from the subject's area to the corrected area and recheck the range. Under Fannie Mae, a conclusion outside the adjusted range must be reconciled again, not just explained.
Common Mistakes to Avoid
- -Correcting an overstated area in the wrong direction
- -Keeping the old conclusion after the range changes
- -Treating Fannie Mae's range requirement as one a comment can satisfy
Concept Deep Dive
Analysis
The question tests correcting an adjustment after a data error and then rechecking the reconciliation. Fixing Sale 2's size moves it from the bottom to the top of the range, which leaves the original conclusion below every adjusted sale.
Background Knowledge
Every adjustment rests on data for both the subject and the comparable, so a corrected fact changes that sale's adjusted price and can change the range. After any correction the appraiser recomputes the grid and reconciles again rather than keeping the earlier conclusion.
Real-World Application
A reviewer measures a comparable and finds the public record overstated its size. The appraiser updates the grid, finds the sale now indicates a higher value, and revises the reconciliation to stay within the corrected range.
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?
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
In a coastal area where many homes have backup power, the subject property has a two-year-old whole-house standby generator, and Comparable 2 has none. No paired sales isolate the generator, and market data show buyers pay about its depreciated replacement cost. The appraiser has four cost figures: a local installer's current bid of $13,500 to install the same model; the manufacturer's current catalog price of $8,900 for that model, which covers the unit only; a cost manual figure for a lower quality class of generator; and the $16,000 the subject's homeowners policy lists as the generator's insured value. Which figure is the best starting point for the adjustment?
Next Question
A comparable sold for $500,000 with only these signed adjustments: +$25,000, −$10,000 and −$5,000. What are its net and gross percentages of the stated sale price?