In the URAR form (Fannie Mae 1004), the 'Sales or Financing Concessions' section is used to:
Correct Answer
D) Identify seller contributions or buyer incentives
The Form 1004 sales-comparison concession line identifies sale or financing concessions in comparable transactions so their market effect can be analyzed. It does not calculate a capitalization rate, seller net proceeds or loan-to-value ratio. Any adjustment must reflect the supported effect on price rather than an automatic deduction of nominal concession dollars; that effect may be zero.
Why This Is the Correct Answer
Option D is correct because the concessions line identifies seller contributions or buyer incentives in the comparable sales. Fannie Mae requires the dollar amount of seller-paid concessions to be reported for comparables when that information is reasonably available. Any adjustment then reflects the supported effect on price, which may be zero.
Why the Other Options Are Wrong
Option A: Determine the appropriate rate of capitalization
Option A is wrong because it says the section determines the appropriate rate of capitalization. Capitalization rates belong to the income approach, not to the concessions line of the sales grid.
Option B: Report the seller's net proceeds from the sale
Option B is wrong because it says the section reports the seller's net proceeds from the sale. The line identifies concessions that may affect price, not what the seller netted after costs.
Option C: Calculate the loan-to-value ratio for the lender
Option C is wrong because it says the section calculates the loan-to-value ratio for the lender. Loan-to-value is a lender underwriting figure, not part of the concessions analysis in the sales grid.
Concessions line names the help
The concessions line names the help the seller or others gave the buyer, so its effect on price can be analyzed.
How to use: Use this when a question asks what the URAR concessions section is for.
Exam Tip
Match the concessions line to identifying seller contributions or buyer incentives, and rule out answers about income, proceeds or lending ratios.
Common Mistakes to Avoid
- -Confusing the concessions line with seller net proceeds
- -Deducting reported concessions without analyzing their price effect
- -Mixing up sales grid items with lender underwriting figures
Concept Deep Dive
Analysis
This question tests the purpose of the sales or financing concessions line in the URAR's sales comparison grid. It identifies seller contributions or buyer incentives in comparable transactions so their market effect can be analyzed. It is not a tool for capitalization rates, seller proceeds or loan-to-value ratios.
Background Knowledge
A sales concession is a cash or noncash contribution from the seller or another party that reduces the buyer's cost to acquire the property. Reporting concessions on comparables lets the appraiser and reader see whether a sale price may have been affected by those terms.
Real-World Application
While verifying a comparable, an appraiser learns the seller paid part of the buyer's closing costs. She reports the amount on the concessions line and then analyzes whether the market data supports any price adjustment.
More Sales Comparison Questions
An appraiser signs, finalizes and electronically transmits a residential appraisal report to the client on March 15. Its value opinion has a March 1 effective date. The client does not open the transmitted report until March 20. What is the report date?
The Dodd-Frank Act's appraisal provisions primarily focus on:
According to AQB criteria, what is the minimum number of classroom hours of qualifying education required for a Certified Residential appraiser?
In a Fannie Mae appraisal, which item does not belong in the appraiser's site analysis?
After delivering a $485,000 URAR, an appraiser discovers a previously undisclosed $15,000 seller repair credit on a comparable sale that may materially change the analysis. What is the most appropriate response?
The special appraisal requirements in Regulation Z §1026.35(c), adopted under Dodd-Frank, concern which covered mortgage category?
A state appraiser regulatory agency is reviewing an appraiser's continuing education compliance. The appraiser completed 28 hours of continuing education in the current two-year period, including 5 hours of USPAP update training. Does this meet AQB requirements?
According to USPAP Standard 2, which of the following is NOT a required element in an appraisal report?
A client asks an appraiser to raise a completed report’s value conclusion by $15,000 solely to match the contract price, without providing new evidence. What should the appraiser do?
A comparable-sale grid includes a $5,000 bathroom adjustment. Which treatment best supports clear appraisal reporting?
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
Related Tools
Previous Question
According to AQB criteria, what is the minimum number of classroom hours of qualifying education required for a Certified Residential appraiser?
Next Question
An AMC that is not owned by a federally insured depository institution wants to manage appraisal panels in a state that has an AMC registration program. Under the federal AMC minimum requirements, with whom must it register?