Lender guidelines that flag net adjustments over 15% or gross over 25% are:
Correct Answer
C) Assignment-specific flags whose actual requirements must be checked; they are not universal USPAP limits
A lender’s expressly stated flag can be an assignment or underwriting condition, not a USPAP numerical limit. Determine what the actual guideline requires and whether compliance permits credible work; explanation alone does not automatically override a genuine contractual restriction. Fannie Mae has no universal fifteen/twenty-five-percent limits.
Why This Is the Correct Answer
Option C is correct because such percentages are assignment-specific flags whose actual requirements must be checked, and USPAP sets no numerical adjustment limits. Fannie Mae states that the number or amount of adjustments must not be the sole determinant of a comparable's acceptability. The appraiser should determine what the lender's guideline requires and whether credible results can be produced within it.
Why the Other Options Are Wrong
Option A: Statutory universal limits enforced by all state appraiser boards
Option A calls them statutory universal limits enforced by all state appraiser boards. These percentages come from lender or underwriting guidelines, not from statutes or a uniform state board rule.
Option B: Absolute Fannie Mae numerical ceilings that disqualify the sale
Option B calls them absolute Fannie Mae numerical ceilings that disqualify the sale. Fannie Mae has no universal 15% net and 25% gross limits and says the number or amount of adjustments must not be the sole factor in accepting a comparable.
Option D: Permission to disregard each lender requirement merely by adding an explanatory sentence to the report
Option D treats them as permission to disregard each lender requirement by adding an explanatory sentence. A genuine contractual requirement is not overridden just by explaining it away; the appraiser must determine what the guideline actually requires.
Flags, not fences
Adjustment percentages raise a flag for review; they are not a fence written into USPAP.
How to use: Use this when a question treats 15% and 25% as universal rules.
Exam Tip
Be wary of answers that cite numeric adjustment limits as USPAP or universal Fannie Mae rules.
Common Mistakes to Avoid
- -Believing USPAP limits net adjustments to 15% and gross to 25%
- -Rejecting a well-supported comparable only because of its adjustment percentage
- -Assuming an explanation alone satisfies any lender restriction
Concept Deep Dive
Analysis
This question tests the nature of net and gross adjustment percentage guidelines. They are lender or assignment flags, not USPAP limits and not universal Fannie Mae ceilings. The appraiser needs to know what the actual guideline in the assignment requires.
Background Knowledge
Net and gross adjustment percentages are commonly used as screening indicators of comparability. USPAP requires credible results and does not set numerical limits on adjustments. Client guidelines may add assignment conditions that the appraiser must identify and address.
Real-World Application
In a rural area, the best comparables need 30% gross adjustments. The appraiser checks the lender's actual guidelines, explains why these sales are still the most similar, and supports each adjustment with market data.
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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