A controlled pair indicates a $16,000 busy-road penalty. What should be evaluated before broader application?
Correct Answer
D) Its applicability and reliability, corroborated by market evidence.
A controlled pair provides an indication whose reliability should be assessed with relevant corroboration where available. Other market evidence can corroborate it; there is no universal mandatory number of extra pairs. Do not automatically discard or double the effect.
Why This Is the Correct Answer
Option D is correct because adjustments must reflect the market's reaction to differences, and a single pair is one indication. Evaluating its applicability and reliability, with corroboration from other market evidence such as statistical analysis or other commonly accepted methods, supports a credible broader application.
Why the Other Options Are Wrong
Option A: Discard the pair, since a single pair has no evidentiary value.
Option A discards the pair because a single pair has no evidentiary value. A controlled pair does provide an indication; it should be evaluated and corroborated, not thrown out.
Option B: Transfer it to other markets without checking its applicability.
Option B transfers the $16,000 penalty to other markets without checking applicability. The effect of a busy road can differ between markets, so the indication must be tested before it is applied elsewhere.
Option C: Double it for expected future traffic, without any support.
Option C doubles the penalty for expected future traffic without any support. Adjustments must be market based, and an unsupported speculative increase does not reflect the market's reaction.
One Pair Needs Friends
A single pair is a clue; corroborating market evidence turns it into reliable support.
How to use: Use this when deciding what to do with one paired-sale indication.
Exam Tip
Choose the answer that evaluates and corroborates evidence; reject answers that discard, transplant or inflate it without support.
Common Mistakes to Avoid
- -Rejecting a valid paired sale as worthless
- -Applying a pair from one market to another without checking
- -Inflating an adjustment for speculative future conditions
Concept Deep Dive
Analysis
This question tests how to treat a single paired-sale indication before applying it more broadly. A controlled pair provides useful evidence, but its reliability and applicability should be evaluated and, where available, corroborated by other market evidence. The answer reflects measured judgment rather than discarding or inflating the result.
Background Knowledge
Fannie Mae expects adjustments to reflect the market's reaction to differences, determined through paired sales, statistical analysis, modeling or other commonly accepted methods, and the report should summarize the supporting evidence. A single pair can be informative, but its reliability improves when other evidence points the same way.
Real-World Application
An appraiser finds two similar homes, one on a busy arterial selling $16,000 less than one on a quiet street. Before applying a traffic adjustment across the report, the appraiser checks other sales and a regression on local data to confirm the effect.
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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