The subject is much older than the neighborhood’s predominant age range. What must the appraiser do in a Fannie Mae report?
Correct Answer
D) Explain why, comment on marketability and on related grid adjustments
When the subject’s age is significantly different from the predominant age range, the appraiser must explain why, comment on marketability and on the adjustments made in the sales comparison grid to reflect that condition.
Why This Is the Correct Answer
Option D is correct because Fannie Mae requires that when the subject's age is significantly different from the predominant age range, the appraiser explain why it is outside the range. The appraiser must also comment on the property's marketability and on the adjustments made in the sales comparison grid to reflect that condition.
Why the Other Options Are Wrong
Option A: Report the age as the predominant age instead
Option A reports the age as the predominant age instead. That would misstate a fact about the subject; the actual age must be reported and explained.
Option B: Exclude the property from the sales comparison approach
Option B excludes the property from the sales comparison approach. An age outside the predominant range calls for explanation and adjustments, not for dropping the approach.
Option C: Adjust all comparables to the subject’s age by a fixed percentage
Option C adjusts all comparables to the subject's age by a fixed percentage. A fixed-percentage adjustment is not market supported, and the requirement is to explain and comment on supported grid adjustments.
Explain, market, adjust
When the subject's age is out of range: explain why, comment on marketability, and comment on the grid adjustments.
How to use: Use this when a question asks what the appraiser must do about an atypical subject characteristic in a Fannie Mae report.
Exam Tip
Fannie Mae questions about atypical properties usually reward explaining and analyzing rather than altering data or excluding the property.
Common Mistakes to Avoid
- -Reporting a different age to match the neighborhood
- -Skipping the sales comparison approach for an atypical property
- -Applying an unsupported fixed-percentage age adjustment
Concept Deep Dive
Analysis
This question tests Fannie Mae's reporting requirement when the subject's age is well outside the neighborhood's predominant age range. The appraiser does not change or ignore the data; instead, the appraiser explains and analyzes it. The required commentary covers why the age differs, marketability and the related grid adjustments.
Background Knowledge
Neighborhood analysis includes the predominant age range of properties. A subject that departs significantly from that range may have different appeal to buyers. Fannie Mae asks the appraiser to address this directly in the report through explanation, marketability comments and grid adjustments.
Real-World Application
An appraiser values a 1920s farmhouse in a neighborhood of homes mostly built in the 1990s. The report explains the age difference, discusses whether buyers find the home less or more appealing, and describes the age and condition adjustments on the grid.
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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