In appraising a condominium unit, the strongest comparables are usually:
Correct Answer
A) Verified sales in the same or genuinely competing projects
Verified sales in the same or genuinely competing condominium projects can be useful substitutes. A different competing project need not share the same HOA, management or amenities; investigate those differences. Project identity alone does not establish reliability or require an absolute same-project-first rule.
Why This Is the Correct Answer
Option A is correct because verified sales in the same or genuinely competing projects appeal to the same market participants who would consider the subject. Differences such as HOA, management or amenities between competing projects should be investigated and adjusted where supported.
Why the Other Options Are Wrong
Option B: Detached single-family homes in the unit’s price range
Option B, detached single-family homes in the unit's price range, are a different property type with different ownership and amenities. Matching price range alone does not make them competitive substitutes for a condominium unit.
Option C: Condominiums anywhere in the metro area with similar size
Option C, condominiums anywhere in the metro area with similar size, ignores location and competition. A unit across the metro area may not appeal to the same buyers as the subject.
Option D: Rental units, assumed to carry identical ownership rights to the unit
Option D, rental units assumed to carry identical ownership rights, is wrong because a rental tenancy does not convey the fee ownership of a condominium unit. Rental data does not provide sales evidence of a unit's value.
Same buyers, same building
The best condo comparables are ones the same buyers would tour, usually in the same or a competing project.
How to use: Use this when choosing comparables for a condominium unit.
Exam Tip
Similar size or price alone does not make a comparable competitive; look for answers that focus on appeal to the same market participants.
Common Mistakes to Avoid
- -Using single-family homes as condo comparables
- -Selecting condos from non-competing areas just because of size
- -Treating rental data as sales evidence for an owned unit
Concept Deep Dive
Analysis
This question tests comparable selection for condominium units. The strongest comparables are verified sales that compete for the same buyers, which usually means sales within the subject's project or in projects that genuinely compete with it.
Background Knowledge
Comparable sales do not need to be identical to the subject, but they should be competitive and appeal to the same buyers. For condominiums, project-level features such as HOA fees, amenities and management can strongly affect value. Sales within the same project or competing projects usually share those market influences most closely.
Real-World Application
An appraiser valuing a two-bedroom condo uses two recent resales in the same building and one sale in a nearby competing project with similar amenities. The appraiser verifies each sale and adjusts for the competing project's different HOA fee and amenities where the market supports it.
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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