Which comparable sales produce the most reliable value indicators?
Correct Answer
A) Sales needing fewer and smaller adjustments
Comparable sales that require fewer and less significant adjustments produce the most reliable indicators of value, and the adjustments themselves must be supported by market data.
Why This Is the Correct Answer
Option A is correct because comparable sales that require fewer and less significant adjustments produce the most reliable indicators of value. Such sales are closer to the subject, so less of the indicated value depends on adjustment estimates.
Why the Other Options Are Wrong
Option B: Sales with the highest prices in the market
Option B selects sales with the highest prices in the market. Price level does not make a sale more comparable; a high-priced sale may be quite different from the subject.
Option C: Sales that required the most adjustments
Option C prefers sales that required the most adjustments. More adjustments mean more estimates and more room for error, so these sales are less reliable.
Option D: Sales from the largest number of different areas
Option D favors sales from the largest number of different areas. Spreading comparables across many areas usually adds location differences and makes the indications less reliable.
Fewer fixes, firmer value
The less you have to fix a comparable, the more you can trust what it tells you about the subject.
How to use: Use this when ranking comparables for weight in reconciliation.
Exam Tip
When asked about reliability, look for the choice that points to fewer and smaller adjustments.
Common Mistakes to Avoid
- -Giving more weight to sales simply because they are higher priced
- -Preferring heavily adjusted sales because they look more thoroughly analyzed
- -Pulling comparables from many areas when closer competitive sales exist
Concept Deep Dive
Analysis
This question tests which comparables give the most reliable value indicators. Each adjustment adds potential error, so sales that need fewer and smaller adjustments are more directly comparable. The adjustments still need market support.
Background Knowledge
Adjustments estimate how the market reacts to differences between the comparable and the subject. Each adjustment introduces some uncertainty, so comparables needing fewer and smaller adjustments generally deserve more weight. Reliability also depends on verification and market support for the adjustments made.
Real-World Application
Of four comparables, one is on the same street with nearly identical size and needs only a small time adjustment. The appraiser gives it the most weight in reconciliation.
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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