The subject property is a three-bedroom ranch on one of the few lots in its suburb that back onto a private lake. Market data show buyers pay more for lake lots. None of the closed sales in the subject's neighborhood over the past six months is on a lake lot, so every sale found so far is inferior for this element. What should the appraiser do?
Correct Answer
B) Extend the search in time or area for lake-lot sales and explain why
With every sale inferior for a feature buyers pay for, the subject cannot be bracketed on that element, so the appraiser widens the search, to older sales or to competing areas, to find sales that share the lake setting, and explains in the report why those sales were used. Leaving the element out ignores a factor that affects value. A sale from a resort market that draws different buyers does not compete with the subject, and an assessed land value is not a measure of what buyers pay for the lake.
Why This Is the Correct Answer
Option B is correct because when the available sales are not similar on an element buyers pay for, the appraiser widens the search to older sales or competing areas and explains why those sales were chosen. This gives market evidence on the lake setting and a chance to bracket it.
Why the Other Options Are Wrong
Option A: Leave the lake element unbracketed and make no adjustment for it
Option A leaves the lake element unbracketed and unadjusted. Market data show buyers pay more for lake lots, so ignoring the difference would understate the subject's value.
Option C: Use a lake-lot sale from a resort market that draws different buyers
Option C uses a lake-lot sale from a resort market that draws different buyers. Comparables should compete with the subject and appeal to the same buyers; a sale from a different market does not show what the subject's buyers pay.
Option D: Measure the lake premium from the subject's assessed land value
Option D measures the lake premium from the subject's assessed land value. An assessed value is not a sale and does not show how buyers in the market react to the lake setting.
Widen the net, then explain
When the pond has no fish of the right kind, cast wider in time or area, and log where you fished.
How to use: Use this when no recent nearby sale shares a feature that buyers pay for.
Exam Tip
Prefer the answer that finds more market evidence for the feature and documents the search over one that skips the element or substitutes a non-market figure.
Common Mistakes to Avoid
- -Ignoring a feature because no recent sale has it
- -Using sales from a market with different buyers
- -Treating an assessed value as market evidence
Concept Deep Dive
Analysis
The question tests what to do when a value-affecting feature cannot be bracketed with the usual search. The appraiser extends the search in time or area for competing sales that share the feature and explains the choice, rather than skipping the element or using sales that do not compete.
Background Knowledge
Sales comparison depends on competing sales that share the subject's key features. When the normal search window or neighborhood lacks them, appraisers extend the time frame or look in competing areas and explain the extension and any time or location adjustments it requires.
Real-World Application
An appraiser valuing a golf-course home finds no golf-course sales in six months. The appraiser extends the search to twelve months and to a competing golf community nearby, adjusts for time and location, and explains the choice 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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