Under Fannie Mae's Selling Guide, an appraiser's Reconciliation comments discuss the reliability of the sales comparison and cost approaches and the quality of the available data, then state the final value opinion. Which required element is missing?
Correct Answer
C) Identification of the approach or approaches given the most weight.
In the Reconciliation section, Fannie Mae's Selling Guide requires the appraiser to reconcile the reliability of each applicable approach, the validity of the indicated values and the reasonableness of the data, and to select and report the approach or approaches given the most weight. The comments cover reliability and data but do not say which approach carried the most weight. A simple average, an income approach that may not apply, or a second value range are not required elements.
Why This Is the Correct Answer
Option C is correct because the Selling Guide requires the appraiser to select and report the approach or approaches given the most weight. The comments described reliability and data quality but did not identify which approach the conclusion relied on most.
Why the Other Options Are Wrong
Option A: A simple average of the indications, shown as a test of reasonableness.
Option A adds a simple average as a test of reasonableness. The Guide bars averaging techniques except an explained weighted average, and it does not require a simple average in any form.
Option B: A statement that the income approach was developed for the subject.
Option B requires a statement that the income approach was developed. The Guide refers to the approaches as applicable, and the income approach often does not apply to an owner-occupied home.
Option D: A second value opinion, expressed as a range around the point value.
Option D adds a second value opinion as a range around the point value. The Guide calls for a final value opinion, not an additional range alongside it.
Name the winner
After discussing each approach, say which one carried the conclusion. Discussing reliability is not the same as reporting the weight.
How to use: Use this when a Fannie Mae reconciliation question describes comments that discuss the approaches but stop short of identifying the most-weighted one.
Exam Tip
For Selling Guide reconciliation questions, remember the four required items and check which one the scenario leaves out.
Common Mistakes to Avoid
- -Discussing reliability without stating which approach received the most weight
- -Including a simple average as support for the final value
- -Assuming every approach must be developed for a single-family home
Concept Deep Dive
Analysis
The question tests the required content of the Reconciliation section under Fannie Mae's Selling Guide. The appraiser addressed reliability and data quality but left out which approach drove the conclusion. Readers need to know the most-weighted approach to understand how the final value was reached.
Background Knowledge
Fannie Mae's Selling Guide lists what the appraiser must address in the Reconciliation section: the reliability of each applicable approach, the validity of the indicated values, the reasonableness of the data, and the approach or approaches given the most weight. These are program requirements for loans sold to Fannie Mae. Stating the most-weighted approach shows how the conclusion was reached.
Real-World Application
A lender's reviewer returns an appraisal because the reconciliation describes the strength of the comparable sales and the cost data but does not say which approach drove the final value. The appraiser revises the comment to state that sales comparison received the most weight and why.
More Reconciliation Questions
In a cost approach for an improved property, an appraiser estimates site value by sales comparison, allocation and extraction, then settles on one site-value figure before final reconciliation. How is this step best described?
An extraordinary assumption was reasonably supported, properly used and disclosed in an appraisal report. Later, the assumed information is found to be false. Which conclusion is best supported?
An otherwise applicable valuation approach cannot be developed reliably from the available data. The remaining scope can produce credible assignment results. What should the appraiser do?
May an appraiser use a hypothetical condition in any assignment?
An appraisal has a current effective date and permits an extraordinary assumption if its requirements are met. Which situation involves uncertain information rather than a fact known to be contrary to reality on that date?
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Which review best helps explain divergent cost, sales-comparison and income indications?
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An unauthorized third party requests a lender-client’s report. No due-process or other permitted disclosure exception applies. How should the appraiser respond?
An appraiser proposes to assume there are no hidden defects. Which fact would characterize that assumption as extraordinary under the USPAP 2024 definition, rather than justify dismissing it as routine boilerplate?
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