While researching a two-story home, an appraiser talks with the listing agent for an active listing of the same model two doors from the subject. The agent says the house is listed at $479,000 and that buyers in the subdivision 'will pay $475,000 or more' for this model. Four verified closed sales of the same model over the past four months sold between $448,000 and $456,000, and the market has been stable. How should the appraiser treat the agent's statements?
Correct Answer
C) As an interested party's view, tested against the verified closed sales
A listing agent has a stake in the listed price, so a claim about what buyers will pay is an interested party's view, not a measured market reaction. Current listings can serve as supporting data, but the verified closed sales in a stable market show what buyers actually paid, $448,000 to $456,000. Treating the claim as the strongest evidence, adjusting the sales toward it, or dropping the closed sales would let an unproven asking-price claim override verified data.
Why This Is the Correct Answer
Option C is correct because the listing agent benefits from a higher price, so the claim is an interested party's view that needs testing. Four verified closed sales of the same model in a stable market show buyers paying $448,000 to $456,000, well below the claim. Listings can be used as supporting data, but the verified closed sales carry the weight.
Why the Other Options Are Wrong
Option A: As the strongest evidence, since the agent works this subdivision daily
Option A treats the agent's statements as the strongest evidence because the agent works the subdivision daily. Local knowledge does not offset the agent's stake in the listing, and the claim conflicts with four verified closed sales.
Option B: As grounds to adjust the closed sales upward toward $475,000
Option B adjusts the closed sales upward toward $475,000. In a stable market there is no market conditions change to justify that, and an asking-price claim is not evidence that the closed sales understate value.
Option D: As a reason to exclude the closed sales in favor of the listing
Option D excludes the closed sales in favor of the listing. An unsold listing shows an asking price, not a price buyers paid, and recent verified sales of the same model are the better evidence of value.
Who gains from the claim?
Before weighing a statement, ask whether the speaker profits if you believe it. The more they gain, the more it needs checking against closed sales.
How to use: Use this when an interview comes from a listing agent, seller, or other interested party.
Exam Tip
When an interested party's claim conflicts with verified closed sales, choose the option that tests the claim rather than one that adopts it or discards the sales.
Common Mistakes to Avoid
- -Treating a listing agent's claim as neutral market evidence
- -Adjusting closed sales toward an asking price
- -Replacing closed sales with an active listing
Concept Deep Dive
Analysis
The question tests how much weight to give a statement from a market participant who has an interest in the outcome. A listing agent's pricing claim reflects hopes for an unsold property. The appraiser can note it and the listing as supporting data, but must test both against verified closed sales.
Background Knowledge
Interviews with market participants are useful, but the reliability of a statement depends on the speaker's knowledge and interest. Parties with a stake in a particular price, such as a listing agent, may overstate what buyers will pay. Verified closed sales remain the primary evidence, with listings and contracts as supporting data.
Real-World Application
A listing agent tells an appraiser that the model reliably sells above $475,000, but recent closings say otherwise. The appraiser notes the listing as supporting data and relies on the closed sales.
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?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
The subject is a 1,900-sf ranch in average condition. Sale 1, a nearby 2,250-sf ranch, needs a new roof and kitchen; it was listed at $395,000 and sold for $372,000. Market data show the size difference is worth about $15,000 and the condition difference about $38,000. Where does Sale 1 belong when the appraiser ranks the sales against the subject?
Next Question
Adjustments for one element have opposite signs across comparables. What should the appraiser assess?