Whatever sources are used, what must the data on a comparable be sufficient to show, according to Fannie Mae?
Correct Answer
C) Sale conditions, concessions, physical traits and arm’s length
There must be sufficient data to understand the conditions of sale, existence of financing concessions, physical characteristics, and whether the sale was an arm’s length transaction.
Why This Is the Correct Answer
Option C is correct because Fannie Mae requires sufficient data to understand the conditions of sale, the existence of financing concessions, the physical characteristics of the property, and whether the sale was an arm's length transaction. These facts determine whether and how the sale must be adjusted. Without them, the appraiser cannot judge the sale's reliability as a comparable.
Why the Other Options Are Wrong
Option A: The credit history and household income of the comparable’s buyer
Option A, the buyer's credit history and household income, concerns the buyer's personal finances. Those details do not describe the sale conditions or the property and are not part of the required comparable data.
Option B: The interest rate and term of the comparable buyer’s new mortgage
Option B, the interest rate and term of the buyer's new mortgage, is not the listed requirement. The appraiser must understand whether financing concessions existed, not collect the buyer's loan terms as such.
Option D: The commission rate that the listing agent earned on the sale
Option D, the listing agent's commission rate, does not describe the conditions of sale, concessions, physical traits or arm's length status. It is not among the data Fannie Mae requires the appraiser to understand.
Terms, Concessions, Traits, Arm's Length
Ask four questions of each comp: what were the sale conditions, were there financing concessions, what is the property like, and was it arm's length?
How to use: Use this checklist when verifying a comparable sale's data.
Exam Tip
Choose the option tied to the transaction and the property; buyer personal data and agent compensation are distractors.
Common Mistakes to Avoid
- -Treating buyer creditworthiness as relevant comparable data
- -Skipping verification of concessions and arm's length status
Concept Deep Dive
Analysis
This question tests Fannie Mae's data requirements for comparable sales. Whatever data sources are used, the appraiser needs enough information to understand the transaction and the property. The focus is on facts that affect price and comparability, not on the buyer's personal finances or agent compensation.
Background Knowledge
Comparable sale data must be verified well enough to know what was sold and under what terms. Conditions of sale, concessions and arm's length status can affect price, and physical characteristics drive comparability adjustments. Fannie Mae allows various data sources but requires the information to be sufficient for this understanding.
Real-World Application
An appraiser finds an MLS record showing a sale with seller-paid closing costs but no detail on the transaction. The appraiser contacts the agent to confirm the concession amount, the property condition and whether the parties were related before relying on the sale.
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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