Under Fannie Mae's Selling Guide, an appraiser notices that competitive sale prices jumped during the last three months after a long flat period. What must the property value trend reported in the neighborhood section reflect?
Correct Answer
B) Overall market movement based on at least 12 months of data
Fannie Mae requires the reported property value trend to reflect the overall movement of the market based on a minimum of 12 months of data, using factual data sources. A three-month burst alone does not meet that standard, the trend is not a forecast, and it reflects competitive properties rather than the subject's own history.
Why This Is the Correct Answer
Option B is correct because Fannie Mae requires the trend indicated in the report to reflect the overall movement of the market based on a minimum of 12 months of data. The recent three-month jump is part of that data, but it does not by itself define the reported trend.
Why the Other Options Are Wrong
Option A: The direction of the most recent three months of sales
Option A uses the direction of the most recent three months of sales. That window is shorter than the 12-month minimum, so it does not show the overall market movement the trend must reflect.
Option C: The appraiser's forecast of values over the coming year
Option C calls for the appraiser's forecast of values over the coming year. The trend is based on factual market data as of the effective date, not a projection of future values.
Option D: The trend in the subject's own listing and sale history
Option D bases the trend on the subject's own listing and sale history. The housing trends must reflect properties competitive with the subject across the market, not a single property's record.
Trend box needs a year
Before checking increasing, stable or declining, make sure you are looking at a full year or more of competitive data.
How to use: Use this when a question tempts you to report a neighborhood trend from a short recent period.
Exam Tip
Distinguish the neighborhood trend, based on at least 12 months, from a comparable's time adjustment, which is based on its own contract-to-effective-date interval.
Common Mistakes to Avoid
- -Basing the value trend on only the last few months
- -Treating the trend as a prediction rather than an analysis of past data
- -Using the subject's own price history as the market trend
Concept Deep Dive
Analysis
The question tests what time frame supports the neighborhood value trend under Fannie Mae's guidance. The trend checkbox is a summary of overall market movement over at least a year, drawn from factual sources about competitive properties, not a short-term snapshot or a prediction.
Background Knowledge
In the neighborhood section, the appraiser reports property values as increasing, stable or declining, supply as shortage, in-balance or over-supply, and marketing time in three ranges. Fannie Mae expects the value trend to rest on factual data such as market data, price indices, MLS and public records covering at least 12 months.
Real-World Application
An appraiser sees three months of sharp gains after a year of flat prices. In the report, the appraiser bases the trend on the full 12-plus months of competitive data and comments separately on the recent acceleration and its effect on time adjustments.
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