Which comment best meets Fannie Mae’s standard for explaining sales comparison adjustments?
Correct Answer
A) A fact-based description of the data and work behind each adjustment
Comments must be fact-based and objective and detail the work performed and data sources used for market-supported adjustments. A statement merely recognizing that adjustments were made is expressly not acceptable.
Why This Is the Correct Answer
Option A is correct because Fannie Mae requires fact-based and objective comments that detail the work performed and the data sources used for market-supported adjustments. A fact-based description of the data and work behind each adjustment does exactly that. A statement only recognizing that an adjustment was made is not acceptable.
Why the Other Options Are Wrong
Option B: “Adjustments were made where necessary for the differences noted.”
Option B, 'Adjustments were made where necessary for the differences noted,' only recognizes that adjustments were made. It gives no work performed or data sources, which Fannie Mae says is not acceptable.
Option C: “All of the adjustments are based on the appraiser’s experience.”
Option C, 'All of the adjustments are based on the appraiser's experience,' cites experience without describing any data or analysis. That does not show the adjustments are market supported.
Option D: “The adjustments follow the lender’s standard adjustment table.”
Option D, 'The adjustments follow the lender's standard adjustment table,' points to a fixed table rather than market evidence. It does not describe the work performed or data sources for market-supported adjustments.
Show the work
Like a math test, adjustment comments earn credit only when they show the data and method.
How to use: Use this when judging whether an adjustment comment is acceptable.
Exam Tip
Choose comments that describe data sources and analysis; reject boilerplate, appeals to experience, or fixed tables.
Common Mistakes to Avoid
- -Using boilerplate that only says adjustments were made
- -Citing experience without data
- -Relying on a standard adjustment table without market support
Concept Deep Dive
Analysis
This question tests Fannie Mae's standard for commenting on sales comparison adjustments. Comments need to be fact-based and objective and must detail the work performed and data sources used. Look for the option that describes evidence, not a generic statement.
Background Knowledge
Adjustment commentary lets readers understand and trust the sales comparison analysis. Fannie Mae expects appraisers to explain how each adjustment was derived, including the data and techniques used. This is especially important for items between Sales or Financing Concessions and Condition on the form.
Real-World Application
In the report addendum, an appraiser explains that the garage adjustment came from three paired sales in the subdivision over the past year and lists the sales used. A reviewer can follow the evidence behind the figure.
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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Previous Question
An appraiser is valuing a 1950s bungalow with a detached workshop. None of the recent neighborhood sales can be paired to isolate what a workshop adds, so the appraiser bases the adjustment on the workshop's current replacement cost less depreciation. Which adjustment technique is the appraiser using?
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