Under Fannie Mae's Selling Guide, what must the appraiser's sales comparison comments include about the comparables' adjusted values?
Correct Answer
D) Their reconciliation of the adjusted values and why certain sales got the most weight
The Selling Guide requires the appraiser's comments to reflect the reconciliation of the comparables' adjusted values and to identify why the sale or sales given the most weight were chosen. A generic statement about standard practice does not show the work behind the adjustments, a straight mean replaces analysis with arithmetic, and Fannie Mae sets no net or gross limits that would force a sale off the grid.
Why This Is the Correct Answer
Option D is correct because the Guide requires the comments to reflect the appraiser's reconciliation of the adjusted values and to identify why the sales given the most weight were chosen. That explanation lets the reader follow how the indicated value was reached.
Why the Other Options Are Wrong
Option A: A statement that each adjustment follows standard industry practice for the area
Option A offers a general statement that adjustments follow standard industry practice. It says nothing about how the adjusted values were reconciled or which sales were weighted most, and the Guide expects fact-based comments rather than generic assurances.
Option B: The arithmetic mean of the adjusted values, reported as the indicated value
Option B reports the arithmetic mean of the adjusted values as the indicated value. A straight mean skips the analysis of which sales are most reliable, which is exactly what the reconciliation comment is meant to show.
Option C: Net and gross percentages, with any sale above set limits removed from the grid
Option C removes sales above set net or gross limits. Fannie Mae does not have specific net or gross adjustment limits, and listing percentages does not explain why particular sales received the most weight.
Show which sales, and why
A sales comparison reconciliation names the sales given most weight and the reasons. Numbers alone do not explain the indication.
How to use: Use this to check whether a sales comparison comment would let a reviewer follow the appraiser's choice.
Exam Tip
Prefer answers that explain the appraiser's reasoning over answers that report a formula or a limit.
Common Mistakes to Avoid
- -Reporting the average of the adjusted values without explanation
- -Writing comments that list adjustments but not how the values were reconciled
Concept Deep Dive
Analysis
This tests the Fannie Mae commentary requirement for reconciling within the sales comparison approach. The key idea is that the reader must be able to see how the adjusted values were resolved into one indication and which sales drove it.
Background Knowledge
Reconciliation happens within an approach as well as among approaches. In the sales comparison approach the appraiser resolves several adjusted sale prices into one indicated value by judging the comparability and support of each, and the report should explain that reasoning.
Real-World Application
An underwriter reads a sales comparison comment stating that Comparables 1 and 3 received the most weight because they are in the same subdivision and needed the fewest adjustments. The comment lets the underwriter see why the indicated value sits near those two adjusted prices.
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?
Why must a report identify any real property interest that is being excluded from the value opinion?
Which review best helps explain divergent cost, sales-comparison and income indications?
Two value indications are $340,000 and $392,000. What is the difference as a percentage of the lower indication, rounded to one decimal place?
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?