Other things equal, which described evidence setting provides the least direct support for a credible sales-comparison indication?
Correct Answer
C) A property for which adequate relevant sale evidence cannot be obtained
Sales comparison depends on suitable market evidence and credible analysis of material differences. A setting with no adequate relevant sale evidence offers less direct support than one with verified competitive sales, such as model-match tract sales, comparable condominium unit sales, or recent sales of close substitutes. Evaluate available evidence and the assignment problem.
Why This Is the Correct Answer
Option C is correct because sales comparison relies on relevant market sales, and a property for which adequate sale evidence cannot be obtained has little direct data to support the indication. Credible results require support by relevant evidence and logic.
Why the Other Options Are Wrong
Option A: A tract home with several verified competitive model-match sales
Option A, a tract home with several verified model-match sales, has strong direct evidence because the comparables are nearly identical competitive properties.
Option B: A condominium with verified recent comparable unit transactions
Option B, a condominium with verified recent comparable unit transactions, offers good direct support since similar units in the market have recently sold.
Option D: A home with verified recent sales of close competitive substitutes
Option D, a home with verified recent sales of close competitive substitutes, has the type of evidence the sales comparison approach depends on and provides strong support.
No comps, weak comparison
The sales comparison approach is only as strong as the sales behind it. Where relevant sales are missing, its support is weakest.
How to use: Use this when asked which setting gives sales comparison the least support.
Exam Tip
For least-support questions, pick the choice describing absent or inadequate sales evidence rather than a property type.
Common Mistakes to Avoid
- -Assuming condominiums are inherently hard to compare
- -Focusing on property type instead of evidence availability
- -Treating any available sale as adequate support
Concept Deep Dive
Analysis
This question tests the dependence of the sales comparison approach on market evidence. The approach is strongest when verified sales of close competitive substitutes exist. The setting with the least direct support is the one where adequate relevant sales cannot be obtained.
Background Knowledge
The sales comparison approach estimates value from verified sales of properties that compete with the subject. Its reliability depends on the quantity, quality and relevance of available sales. When such evidence is lacking, the appraiser may need other approaches or must explain the limits of the analysis.
Real-World Application
An appraiser is asked to value a one-of-a-kind rural estate with no similar sales in the region for several years. Unlike a tract home with many model-match sales, this assignment offers little direct sales evidence, so the appraiser considers other approaches and explains the data limitations.
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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Previous Question
A comparable sale of $412,000 is rated against a 1,600-square-foot ranch subject as follows: location similar, site similar, gross living area inferior (1,450 square feet), condition inferior, garage similar. What does this relative comparison indicate about the subject's value?
Next Question
Comparable 2, a single-family home on the ridge of a tract with a valley view, sold for $410,000; the subject is an otherwise similar interior home with no view. Leases in the tract show ridge homes rent for $2,475 per month and interior homes for $2,300. Rented homes in the tract sell at a monthly gross rent multiplier of 160. Current listings of ridge homes ask about $25,000 more than interior homes, and the builder charged an $18,000 lot premium for ridge lots when the tract opened in 2009. What is Comparable 2's price after the view adjustment?