Paired sales are drawn from transactions six months apart in a stable market. The time adjustment needed is:
Correct Answer
D) No time adjustment, supported by the stable-market evidence
If relevant verified evidence shows no market change over the interval, zero market-condition adjustment is appropriate. Elapsed months alone do not require an arbitrary positive amount. Explain the evidence supporting the stable-market conclusion.
Why This Is the Correct Answer
Option D is correct because, if verified evidence shows no market change over the interval, a zero market-conditions adjustment is appropriate. Time adjustments, or the lack thereof, must be supported by evidence. The appraiser should explain the evidence supporting the stable-market conclusion.
Why the Other Options Are Wrong
Option A: A minimum six-percent time adjustment for the interval
Option A, a minimum six-percent time adjustment, is wrong because nothing supports such a minimum. In a stable market the evidence supports no adjustment.
Option B: A monthly adjustment based on the six-month interval
Option B, a monthly adjustment based on the six-month interval, is wrong because elapsed months alone do not create a market change. With stable-market evidence, there is no monthly change to apply.
Option C: Rejection of the earlier sale as too old to use
Option C, rejecting the earlier sale as too old, is wrong because a six-month-old sale in a stable market can still be good evidence. Age alone does not disqualify it.
No change, no adjustment
Time passing is not the same as prices changing; adjust only for a market change the evidence shows.
How to use: Use this when a question pairs elapsed time with a stable market.
Exam Tip
When the stem says the market is stable, options that impose a fixed or monthly time adjustment are likely wrong.
Common Mistakes to Avoid
- -Applying a time adjustment just because months have passed
- -Discarding older sales in a stable market
- -Using a rule-of-thumb percentage without market evidence
Concept Deep Dive
Analysis
This question tests whether elapsed time alone requires a time adjustment. The stem says the market was stable, and Fannie Mae requires that time adjustments, or the lack of them, be supported by evidence. When evidence shows no change, the supported adjustment is zero.
Background Knowledge
Market-conditions adjustments reflect changes in price levels over time, not the mere passage of time. Fannie Mae requires that time adjustments, or their absence, be supported by evidence. In a stable market, an older sale may need no time adjustment.
Real-World Application
An appraiser compares sales six months apart in a neighborhood where repeat sales and median prices show no change. The appraiser applies no time adjustment and cites that evidence in the report.
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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