For an existing-home Fannie Mae appraisal outside the new or recently converted project exceptions in Selling Guide B4-1.3-08, how do closed comparables differ from supporting listings and contract offerings?
Correct Answer
C) At least three closed sales are required; listings may add support
For the specified standard Fannie policy, at least three closed comparables are reported. Appropriate listings and contract offerings may support analysis but do not replace that minimum. New or recently converted project exceptions require their own policy analysis; this question expressly excludes them.
Why This Is the Correct Answer
Option C is correct because Selling Guide B4-1.3-08 requires a minimum of three closed comparables in the sales comparison approach. Contract offerings and current listings can be used as supporting data, if appropriate, but they do not replace the closed-sale minimum.
Why the Other Options Are Wrong
Option A: Three active listings alone satisfy the closed-comparable minimum
Option A says three active listings alone satisfy the closed-comparable minimum. Listings are supporting data and are not closed sales, so they cannot meet the three-closed-comparable requirement.
Option B: Each accepted contract counts as a closed comparable
Option B says each accepted contract counts as a closed comparable. A pending contract has not closed; contract offerings are supporting data, not closed comparables.
Option D: Closed sales are prohibited as comparables whenever prices decline
Option D says closed sales are prohibited as comparables whenever prices decline. Nothing in the policy bars closed sales in a declining market; declining conditions call for analysis and supported adjustments, and closed sales remain required.
Three closed, listings support
The core is three closed sales; listings and contracts are the backup singers. They add support but cannot take the lead role.
How to use: Use this to reject answers that let listings or contracts replace closed sales.
Exam Tip
Separate what counts toward the minimum from what may be supporting data. Closed sales count; listings and contracts support.
Common Mistakes to Avoid
- -Counting pending contracts as closed comparables
- -Using listings alone to meet the comparable minimum
- -Believing closed sales cannot be used in a declining market
Concept Deep Dive
Analysis
This question tests Fannie Mae's comparable requirements for a standard existing-home appraisal. At least three closed comparables must be reported, while contract offerings and current listings can serve as supporting data. The project exceptions are expressly excluded, so the standard rule applies.
Background Knowledge
Closed sales show prices actually paid and form the core of the sales comparison approach. Listings and pending contracts can show current market direction and support the analysis. Fannie Mae's standard policy requires at least three closed comparables, with separate rules for certain new or recently converted projects.
Real-World Application
In a rapidly changing market, an appraiser reports three closed sales and adds two pending sales and one active listing. The extra data supports her market-conditions adjustment while the closed sales satisfy the minimum.
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