Which of these is listed by Fannie Mae as a sales or financing concession?
Correct Answer
A) Non-realty items included in the transaction
Fannie Mae’s list of concessions includes items such as buydowns, discount points, buyer closing costs paid by the seller, payment of HOA fees and inclusion of non-realty items in the transaction.
Why This Is the Correct Answer
Option A is correct because Fannie Mae's list of sales or financing concessions includes the inclusion of non-realty items in the transaction. Other listed examples include buydowns, discount points, buyer closing costs paid by the seller, and payment of HOA fees. Non-realty items can inflate the recorded price above what the real estate alone would bring.
Why the Other Options Are Wrong
Option B: A buyer’s own payment for a home inspection
Option B is wrong because a buyer paying for their own home inspection is an ordinary buyer expense, not something the seller or another party contributed. It does not appear on Fannie Mae's list of concessions.
Option C: A higher price paid for a larger building site
Option C is wrong because a higher price paid for a larger building site reflects a physical difference in the property, which is handled as a site adjustment. It is not a sales or financing concession.
Option D: A shorter marketing time for the comparable
Option D is wrong because a shorter marketing time describes how quickly the comparable sold, which relates to market conditions or exposure. It is not an item contributed to the transaction and is not a listed concession.
Extras Thrown Into Deal
A concession is an extra thrown into the deal, such as paid costs, paid points, or included furniture, not a feature of the land or house itself.
How to use: Use this test to sort answer choices into concessions versus property or market differences.
Exam Tip
If an option describes a physical feature or a market-timing fact, it is not a concession; look for items added to the transaction such as non-realty items or seller-paid costs.
Common Mistakes to Avoid
- -Treating buyer-paid inspection fees as a concession
- -Confusing physical differences such as lot size with concessions
- -Ignoring personal property included in the sale
Concept Deep Dive
Analysis
This question tests recognition of items Fannie Mae lists as sales or financing concessions. A concession is something added to the transaction that can affect the recorded price beyond the real estate itself. The candidate must separate concessions from ordinary buyer costs and from normal property or market differences.
Background Knowledge
Sales and financing concessions are benefits given to the buyer, often by the seller, that can push the recorded price above the cash-equivalent price. Fannie Mae lists items such as buydowns, discount points, seller-paid buyer closing costs, payment of HOA fees, and inclusion of non-realty items. The appraiser must identify these and consider the market's reaction to them.
Real-World Application
An appraiser verifies a comparable sale and learns the seller left a hot tub, patio furniture and a riding mower as part of the deal. Because non-realty items were included in the transaction, the appraiser considers whether they affected the price. Any adjustment is based on market reaction rather than an assumed amount.
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?
A comparable went under contract two weeks before the effective date. What does Fannie Mae expect about a time adjustment?
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