Under Fannie Mae guidance, when is a subdivision generally considered new for comparable selection purposes?
Correct Answer
B) When it has limited or no resales, or the builder is involved in sales
A subdivision is generally considered new when there are limited or no resales or the builder or developer is involved in the marketing or sale of the properties.
Why This Is the Correct Answer
Option B is correct because Fannie Mae generally considers a subdivision new when there are limited or no resales, or the builder or developer is involved in marketing or selling the properties. These conditions matter because builder sales may include incentives and may not reflect the resale market. Either condition can make the subdivision new for comparable selection.
Why the Other Options Are Wrong
Option A: When the subdivision plat was recorded within the last ten years
Option A is wrong because a plat recorded within the last ten years is not the Fannie Mae test. The definition looks at resale activity and builder involvement, not plat recording dates.
Option C: When the homes in it are less than one year old on average
Option C is wrong because homes averaging less than one year old is not the Fannie Mae criterion. A subdivision is generally new based on limited resales or builder involvement in sales.
Option D: When its HOA has not yet adopted a budget
Option D is wrong because whether the HOA has adopted a budget is not part of the definition. The test concerns resales and builder or developer involvement.
Few resales or builder sales
New means the resale market has not taken over: few or no resales, or the builder is still selling.
How to use: Use this two-part test whenever a question asks when a subdivision is considered new.
Exam Tip
Look for answers tied to resale activity and builder involvement rather than calendar ages or HOA milestones.
Common Mistakes to Avoid
- -Using plat age to define a new subdivision
- -Using average home age as the test
- -Assuming HOA status determines whether a subdivision is new
Concept Deep Dive
Analysis
This question tests Fannie Mae's definition of a new subdivision for comparable selection. The test is based on resale activity and builder involvement, not on plat age, home age or HOA status. A subdivision is generally new when there are limited or no resales or the builder or developer is involved in marketing or sales.
Background Knowledge
In new subdivisions, builder sales may reflect incentives and may differ from what resale buyers pay. Fannie Mae has comparable selection guidance for new construction and new subdivisions to address this. Knowing when a subdivision counts as new triggers that guidance.
Real-World Application
An appraiser values a home in a development where the builder still sells new houses and only two resales have closed. She treats it as a new subdivision and selects comparables to show both builder sales and resale market activity.
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?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam