One comparable in a grid required an adjustment on every line, totaling 35% gross. What does this signal about the appraisal?
Correct Answer
D) Investigate overall comparability and support; the percentage alone does not determine acceptability
A 35% gross total and many adjustment lines warrant evaluating overall comparability and evidentiary support. They do not establish a USPAP 25–30% limit or prove the sale unusable. Fannie Mae also sets no specific net/gross adjustment limitations; magnitude alone is not the acceptance test.
Why This Is the Correct Answer
Option D is correct because a 35% gross total with an adjustment on each line calls for investigating overall comparability and the evidence behind the adjustments. Fannie Mae states that the number or amount of adjustments must not be the sole determinant of a comparable's acceptability. The percentage is a warning sign, not a pass-or-fail test.
Why the Other Options Are Wrong
Option A: Reject it under a USPAP rule capping gross adjustments at 25%
Option A is wrong because it cites a USPAP rule capping gross adjustments at 25%. USPAP contains no such percentage cap, and Fannie Mae also sets no specific net or gross adjustment limit.
Option B: Conclude that the subject is over-improved for its neighborhood
Option B is wrong because it concludes the subject is over-improved for its neighborhood. Large adjustments on one comparable show that sale differs from the subject; they do not by themselves establish over-improvement.
Option C: Assume each adjustment is wrong because adjustments were needed on many lines, and reject the sale from the grid
Option C is wrong because it assumes each adjustment is wrong because many lines needed adjusting and rejects the sale. Many adjustments call for checking their support, but they do not prove the adjustments are wrong or that the sale is unusable.
Big adjustments: investigate, don't eliminate
A high gross percentage is a flag to look closer at the sale and its support, not a rule that removes it from the grid.
How to use: Use this when a question attaches a fixed percentage limit to adjustments.
Exam Tip
Be wary of answers citing a USPAP percentage cap on adjustments; USPAP does not set one.
Common Mistakes to Avoid
- -Believing USPAP caps gross adjustments at a set percentage
- -Rejecting a comparable based on adjustment size alone
- -Inferring over-improvement from one heavily adjusted comparable
Concept Deep Dive
Analysis
This question tests how to interpret a comparable with large gross adjustments. Many adjustments and a high gross total are signals to check the sale's overall comparability and the support for each adjustment. Neither USPAP nor Fannie Mae sets a fixed gross adjustment percentage that decides whether a comparable is acceptable.
Background Knowledge
Two common guides to comparability are the number of adjustments and the absolute gross adjustment for each sale. These guides help the appraiser decide how much weight to give a sale, but acceptability depends on overall comparability, data availability and the support for the adjustments.
Real-World Application
In a rural area with few sales, an appraiser's best available comparable needs a 35% gross adjustment. He keeps it, documents the market support for each adjustment, explains why better sales were not available and gives it appropriate weight.
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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