Under Fannie Mae Selling Guide B4-1.4-03 (Condo Appraisal Requirements), which statement correctly describes what the appraiser must analyze when appraising an individual unit in a condo project?
Correct Answer
C) The condo project as well as the individual unit — with special attention to the unit’s location within the project, the project amenities, and the amount and purpose of the owners’ association assessment
For this Fannie Mae assignment, analyze both the individual unit and its project. The cited provision calls attention to unit location within the project, project amenities, and the amount and purpose of the association assessment because project appeal influences unit value and marketability.
Why This Is the Correct Answer
Option C is correct because under Fannie Mae Selling Guide B4-1.4-03 the appraiser analyzes the condo project as well as the individual unit. Special attention goes to the unit's location within the project, the project amenities, and the amount and purpose of the owners' association assessment. These matter because the project's appeal influences the unit's value and marketability.
Why the Other Options Are Wrong
Option A: The interior of the individual unit; project amenities, location within the project and association assessments are lender underwriting items that fall outside the appraiser’s scope of work for the unit
Option A limits the analysis to the unit interior and calls project amenities, location within the project and association assessments lender underwriting items outside the appraiser's scope. The guide places these project items within the appraiser's analysis because they affect unit value.
Option B: Whether the project’s declaration has been recorded; amenity, location and assessment analysis applies to co-op projects rather than condo units
Option B focuses on whether the declaration has been recorded and says amenity, location and assessment analysis applies to co-op projects rather than condo units. The cited condo guidance calls for that analysis for condo units.
Option D: Only three closed sales of units in unrelated condo projects citywide; project-specific location/amenities/assessments need not be addressed
Option D calls for only three closed sales of units in unrelated condo projects citywide and says project-specific location, amenities and assessments need not be addressed. That ignores the project-level analysis the guide requires for a condo unit.
Unit plus project
A condo unit is valued as part of its project: where it sits, what the project offers, and what the association charges and why.
How to use: Use this pairing when a question asks what a condo appraisal must cover.
Exam Tip
For condo questions, prefer answers that include both the unit and the project. Choices that push project items onto the lender alone are likely wrong.
Common Mistakes to Avoid
- -Treating project amenities and assessments as outside the appraiser's scope
- -Using condo sales from unrelated projects without addressing project differences
Concept Deep Dive
Analysis
This question tests what a Fannie Mae condo appraisal requires the appraiser to analyze. The unit's value depends partly on the project it sits in, so the appraiser looks at both the project and the unit. Key items are the unit's location within the project, project amenities, and the amount and purpose of the owners' association assessment.
Background Knowledge
A condominium unit's value reflects both the unit and the shared project, including common areas, amenities and association finances. Association assessments affect owners' ongoing costs and can influence buyer demand. Lender guidelines set specific items the appraiser must address in condo assignments.
Real-World Application
An appraiser values a condo unit facing a busy street in a project with a pool and fitness center. She compares sales within the same project, notes the unit's less desirable location, and reports the amount and purpose of the monthly association assessment.
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