REO's may dominate the market, but if my subject is not an REO, shouldn't it be treated as a "micro market". I have used Transaction Type as a micro market and used comps that best reflect that micro market. Short sales to short sales, REO's to REO's, and arms's length to arm's length. I had an order for a purchase of a home that had sold at forclosure to an investor, fully renovated into like new condition and then was resold. I was doing the purchase after it was renovated. Knowing the area, my initial reaction was the purchase price was high. Once I started to do my research I found several similar style homes with similar GLA's and similar amenities with the same history. Foreclosure, renovation, re-sale. There were different buyers and sellers and after talking with the brokers I was convinced they were all arm's length transactions. Selling prices the second time around were pretty tightly bunched also. A micro market had emerged from the foreclosures and REO"s and justified the sales price of my subject. I was taught to compare apples to apples and I have learned to refine it to compare fresh apples to fresh apples or rotten apples to rotten apples.