Verification of a suspected concession is best pursued through:
Correct Answer
C) Verify the terms using reliable transaction records and knowledgeable parties
Investigate the concession through reliable transaction evidence and knowledgeable parties, reconciling inconsistencies. A closing disclosure, lender file or other reliable record can be useful; no single source label automatically establishes or invalidates the price effect.
Why This Is the Correct Answer
Option C is correct because sales and financing data should be obtained from parties associated with the comparable transaction, such as the broker, buyer or seller, or from a reliable data source. Reliable transaction records and knowledgeable parties can confirm whether a concession existed and its terms. Inconsistencies between sources should be reconciled before drawing a conclusion.
Why the Other Options Are Wrong
Option A: Infer the concession from exterior photographs of the sale
Option A, inferring the concession from exterior photographs of the sale, is wrong because photos show the property, not the transaction terms. A concession must be verified from records or parties to the sale.
Option B: Assume an automated value estimate proves the financing terms of the comparable sale
Option B, assuming an automated value estimate proves the comparable's financing terms, is wrong because a value model does not document the actual financing or concessions in a specific sale.
Option D: Ignore the issue if the asking price looked reasonable
Option D, ignoring the issue if the asking price looked reasonable, is wrong because a reasonable-looking price does not show whether concessions affected it. A suspected concession should be investigated.
Ask those who were there
Concessions are confirmed by parties to the deal and reliable records, not by photos, models or guesses.
How to use: Use this when a question asks how to confirm terms of a comparable sale.
Exam Tip
Pick the answer that involves verifying with reliable sources; answers built on assuming, inferring or ignoring are usually distractors.
Common Mistakes to Avoid
- -Accepting the recorded price without checking for concessions
- -Treating an automated value as proof of sale terms
- -Ignoring a suspected concession because the price seems reasonable
Concept Deep Dive
Analysis
This question tests how an appraiser verifies sale terms such as concessions. Concessions are often invisible in listing photos or price data, so they must be confirmed from reliable records and people involved in the transaction. Choose the option that relies on verifiable evidence rather than inference or assumption.
Background Knowledge
Sales and financing concessions can inflate a recorded price above what the property would bring on typical terms. Appraisers verify transaction terms with brokers, buyers, sellers, closing documents or other reliable data sources. No single source label automatically establishes or invalidates the price effect.
Real-World Application
An appraiser notices a comparable's price is unusually high for its condition. A call to the listing agent and a review of the closing figures reveal the seller paid large closing costs, which the appraiser then considers for a concession adjustment.
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?
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