SelectedItem in WPF selects the entire instance, so if you're binding SelectedItem to an Entity's navigation property, then all is good. However, if you're binding SelectedItem to an Entity's non-navigation property, then this can be a problem, and I'd recommend if this this a business requirement that you instead bind SelectedValue.
For me, I find it best to bind SelectedItem to my Entity's navigation property AND SelectedValue to my Entity's value property.
I hope this helps.