Where can an appraiser appropriately obtain the sales or financing concession data for a comparable sale?
Correct Answer
C) From parties to the comparable sale or a reliable data source
Fannie Mae says concession data should come from parties associated with the comparable transaction, such as the broker, buyer or seller, or a reliable data source. The subject’s contract, an AVM or an assessed value does not describe the comparable’s terms.
Why This Is the Correct Answer
Option C is correct because Fannie Mae states that sales or financing data should be obtained from parties associated with the comparable transaction, such as the broker, buyer or seller, or a reliable data source. These sources know or record the actual terms of that sale.
Why the Other Options Are Wrong
Option A: From the purchase contract for the subject property
Option A uses the purchase contract for the subject property. The subject's contract describes the subject's terms, not the concessions in a comparable's sale.
Option B: From the lender’s automated valuation report on the subject
Option B uses the lender's automated valuation report on the subject. An AVM on the subject gives a model estimate of value and does not report the comparable's concessions.
Option D: From the assessor’s current assessed value for the comparable
Option D uses the assessor's current assessed value for the comparable. An assessed value is a tax figure and does not reveal the financing or sales concessions in that transaction.
Ask the people in the deal
Terms of a sale come from those involved in that sale or a reliable record of it.
How to use: Use this when asked how to verify a comparable's concessions.
Exam Tip
Choose sources tied to the comparable's own transaction; anything about the subject or a tax roll does not describe the comparable's terms.
Common Mistakes to Avoid
- -Using the subject's contract terms to describe a comparable
- -Relying on an AVM for transaction details
- -Treating assessed value as evidence of sale terms
Concept Deep Dive
Analysis
This question tests where an appraiser gets concession data for a comparable sale. Fannie Mae says such data should come from parties to the comparable transaction or a reliable data source. The point is that only sources tied to that transaction can describe its terms.
Background Knowledge
Verifying a comparable's terms is part of making sure its price reflects typical market conditions. Concessions such as seller-paid closing costs or buydowns can affect price. Sources linked to the transaction, such as agents, buyers, sellers or reliable data services, are the appropriate places to confirm them.
Real-World Application
MLS notes for a comparable show seller-paid costs but no amount. The appraiser calls the listing agent, confirms $8,000 in seller-paid closing costs and considers whether the market price was affected.
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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