The subject itself sold and closed eight months ago. How may that prior sale be used in a Fannie Mae appraisal?
Correct Answer
C) It may serve as a fourth comparable or as supporting data
Fannie Mae states the subject property can be used as a fourth comparable sale or as supporting data if it previously closed. The minimum of three closed comparables still applies.
Why This Is the Correct Answer
Option C is correct because Fannie Mae states the subject property can be used as a fourth comparable sale or as supporting data if it previously closed. It is added to, not substituted for, the three required closed comparables.
Why the Other Options Are Wrong
Option A: It must be excluded, because a subject sale cannot be a comparable
Option A says the prior sale must be excluded because a subject sale cannot be a comparable. Fannie Mae expressly allows the subject's prior closed sale as a fourth comparable or supporting data.
Option B: It replaces one of the three required closed comparables in the grid
Option B says the subject's sale replaces one of the three required closed comparables. The minimum of three closed comparables still applies, so the subject sale can be a fourth comparable, not a replacement.
Option D: It may be used as a comparable when it closed within 90 days
Option D limits use to a sale that closed within 90 days. Fannie Mae's guidance on using the subject's prior closed sale does not state a 90-day condition, and this eight-month-old sale can still serve as a fourth comparable or supporting data.
Subject sale is a bonus
The subject's prior closed sale can be an extra fourth comparable or supporting data, but the three closed comparables are still needed.
How to use: Use this when a question asks how a subject's prior sale fits in the grid.
Exam Tip
Watch for answers that let the subject's sale count toward the minimum of three closed comparables; that is not what Fannie Mae allows.
Common Mistakes to Avoid
- -Excluding the subject's prior sale entirely
- -Counting the subject's prior sale as one of the three required comparables
- -Inventing a time limit for using the subject's prior sale
Concept Deep Dive
Analysis
This question tests Fannie Mae guidance on using the subject's own prior closed sale. Fannie Mae permits the subject's previous closed sale to be used as a fourth comparable or as supporting data, while the minimum of three closed comparables still applies.
Background Knowledge
Fannie Mae requires at least three closed comparable sales in the sales comparison approach. Additional data, such as a fourth comparable or the subject's own prior closed sale, can supplement those three. The appraiser still analyzes the prior sale's timing and any changes to the property since it sold.
Real-World Application
An appraiser learns the subject closed eight months ago. The appraiser uses three closed sales of other properties as the main comparables and adds the subject's prior sale as a fourth comparable, adjusting for market conditions since that sale.
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?
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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?
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