When completing the One-Unit Housing Trends in a Fannie Mae report, which properties should the trends reflect?
Correct Answer
A) Properties competitive with the property being appraised
The trends must reflect properties deemed competitive with the subject; if all properties in the neighborhood are truly competitive, all of them would be reflected.
Why This Is the Correct Answer
Option A is correct because Fannie Mae Selling Guide B4-1.3-03 states that the One-Unit Housing Trends must be reflective of those properties deemed to be competitive to the property being appraised. Competitive properties are the ones buyers would weigh against the subject. When all neighborhood properties are truly competitive, all of them would be reflected.
Why the Other Options Are Wrong
Option B: All one-unit properties sold anywhere in the county
Option B, all one-unit properties sold anywhere in the county, is far too broad; county-wide sales include many properties that do not compete with the subject.
Option C: Properties listed through the lender’s referral partners
Option C, properties listed through the lender's referral partners, has no connection to competitiveness and would introduce a biased, irrelevant data set.
Option D: Newly built homes in the subject’s neighborhood this year
Option D, newly built homes in the subject's neighborhood this year, is too narrow and unrelated to the standard; competitive properties are not limited to new construction.
Trends track the competition
The housing trends describe the subject's competitors, the properties a buyer would realistically consider instead.
How to use: Use this to pick the answer that limits the data to properties competitive with the subject.
Exam Tip
When a reporting question asks which properties to analyze, the answer usually centers on properties competitive with the subject.
Common Mistakes to Avoid
- -Using county-wide data for neighborhood trends
- -Limiting trends to new construction only
- -Including properties that do not compete with the subject
Concept Deep Dive
Analysis
This question tests Fannie Mae's guidance on completing the One-Unit Housing Trends in the neighborhood section. The trends must reflect properties competitive with the subject, not a broader or unrelated group. If every property in the neighborhood is truly competitive, then all of them are reflected.
Background Knowledge
The neighborhood section of Fannie Mae appraisal reports includes housing trends such as property values, demand and supply, and marketing time. These trends should describe the market segment that competes with the subject. Using a mismatched data set can misstate market conditions for the subject.
Real-World Application
A neighborhood contains both modest older ranch homes and a newer luxury enclave. When appraising a ranch home, the appraiser bases the One-Unit Housing Trends on the competing ranch-style homes rather than on the luxury sales that buyers of the subject would not consider.
More Market Questions
In market area analysis, what characteristic distinguishes a district from a neighborhood?
Under USPAP Standards Rule 1-3(a), which item must an appraiser identify and analyze when necessary for credible results in a market value assignment?
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An appraiser is asked for a retrospective value opinion as of three years ago. When must the appraiser meet the Competency Rule?
Can mixed land uses in a residential neighborhood ever enhance home values, according to Fannie Mae?
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