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GLA Guideline of a comp

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by DKAYTES, Jun 4, 2007.

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  1. DKAYTES

    DKAYTES Junior Member

    0
    Jun 4, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    New Jersey
    I have been looking for the guideline that establishes acceptable percentage of a comp's GLA to that of the subject property. As a rule I have only been using comps ( if possible) 85% or greater of the GLA of the subject property. Sometimes this is unavoidable. I have been looking through the guidelines and have not been able to find in writting the Fannie Mae acceptable percentage guideline that states the acceptable square footage differences. Can someone point me in the right direction? Thanks.
     
  2. OSU Beavers

    OSU Beavers Elite Member

    6
    Jan 10, 2007
    Professional Status:
    Licensed Appraiser
    State:
    Oregon
    If you can't find comps within guidelines just use the best there is and explain why.
     
  3. DKAYTES

    DKAYTES Junior Member

    0
    Jun 4, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    New Jersey
    I always use the best comps, but I just had someone challange an appraisal andh their comps are much smaller, one is even 67% of the subject's GLA. This is why I am looking for the guideline so I can quote fannie mae.
     
  4. Mike Kennedy

    Mike Kennedy Elite Member

    62
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    http://www.georgiaappraiser.com/db/fnma/


    406.02: Selection of Comparable Sales
    Home Previous Next
    We require an appraiser to research, analyze, and consider influences that may affect value based on market evidence (such as closed sales, contract sales, and properties for sale in the market area; market studies; etc.). For example, if a property is located in a neighborhood that includes (or is close to) an airport or hazardous waste site or that has relatively high property taxes or vacant or boarded-up properties, we expect the appraiser to research, analyze and use comparable sales from the same neighborhood or affected area (whenever possible) in his or her analysis. This will assure that any effect of these value-influencing characteristics is taken into consideration in the development of the opinion of value for the property.

    If a property is located in an area in which there is a shortage of truly comparable sales -- either because of the nature of the property improvements or the relatively low number of sales transactions in the neighborhood -- the appraiser might need to use as comparable sales properties that are not truly comparable to the subject property or properties that are located in competing neighborhoods. In some situations, sales of properties that are not truly comparable or sales of properties that are located in competing neighborhoods may simply be the best comparables available and the most appropriate for the appraiser's analysis. The use of such comparables is acceptable as long as the appraiser adequately documents his or her analysis and explains why these comparable sales were used (including a discussion of how a competing neighborhood is comparable to the subject neighborhood).

    The appraiser must report a minimum of three comparable sales as part of the sales comparison approach to value. The appraiser may submit more than three comparable sales to support his or her opinion of market value, as long as at least three are actual settled or closed sales. Generally, the appraiser should use comparable sales that have been settled or closed within the last 12 months. However, the appraiser may use older comparable sales if he or she believes that it is appropriate, and selects comparable sales that are the best indicators of value for the subject property. The appraiser must comment on the reasons for using any comparable sales that are more than six months old. For example, if the subject property is located in a rural area that has minimal sales activity, the appraiser may not be able to locate three truly comparable sales that sold in the last 12 months. In this case, the appraiser may use older comparable sales as long as he or she explains why they are being used.

    The appraiser may use the subject property as a fourth comparable sale or as supporting data if the property previously was sold (and closed or settled). If the appraiser believes that it is appropriate, he or she also may use contract offerings and current listings as supporting data. However, in no instance may the appraiser create comparable sales by combining vacant land sales with the contract purchase price of a home (although this type of information may be included as additional supporting documentation).

    For properties that are in established subdivisions or for units in established condominium or PUD projects that have resale activity, the appraiser should use comparable sales from within the same subdivision or project as the subject property if there are any available. Resale activity from within the subdivision or project should be the best indicator of value for properties in that subdivision or project. If the appraiser uses sales of comparable properties that are located outside of the subject neighborhood, he or she must include an explanation with the analysis.

    For properties in new subdivisions or for units in new (or recently converted) condominium or PUD projects, the appraiser must compare the subject property to other properties in its general market area as well as to properties within the subject subdivision or project. This comparison should help demonstrate market acceptance of new developments and the properties within them. Generally, the appraiser should select one comparable sale from the subject subdivision or project and one comparable sale from outside the subject subdivision or project. The third comparable sale can be from inside or outside of the subject subdivision or project, as long as the appraiser considers it to be a good indicator of value for the subject property. In selecting the comparables, the appraiser should keep in mind that sales or resales from within the subject subdivision or project are preferable to sales from outside the subdivision or project as long as the developer or builder of the subject property is not involved in the transactions.

    Because rural properties often have large lot sizes and rural locations can be relatively undeveloped, there may be a shortage (or absence) of recent truly comparable sales in the immediate vicinity of a subject property that is in a rural location. This means that the appraiser will often need to select comparable sales that are located a considerable distance from the subject property. In such cases, the appraiser must use his or her knowledge of the area and apply good judgment in selecting comparable sales that are the best indicators of value for the subject property. The appraiser should include an explanation of why the particular comparables were selected in his or her analysis.
     
    Last edited: Jun 5, 2007
  5. DKAYTES

    DKAYTES Junior Member

    0
    Jun 4, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    New Jersey
    Thanks Mike for the link... but I still have not found an explicid guideline pertaining to accepable square footage of comp to that of the subject.
     
  6. Mary Tiernan

    Mary Tiernan Senior Member

    0
    Dec 16, 2003
    Professional Status:
    Retired Appraiser
    State:
    Michigan
    I believe somewhere in Fannie it explains the bracketing method.

    Also, keep in mind the 10% line adjustment guideline. Do the adjustments for the reviewer's comps exceed that?

    I just don't see why you can't just explain why you did not use the comps as utilized in the review because . . . 67% smaller square footage than subject, considered not relevant to the subject, etc.

    If you truly feel your comparables are superior, explain in a rebuttal. Explain why the sales utilized in the review are inferior and why you did not use them in your analysis. Were reveiw comps similar in style, location, condition, and market appeal? Why would a typical buyer look at the comps you choose versus the comps used in review.

    If you are unable to find the bracketing quote, I will look at my book, have it bookmarked somewhere, just not sure if the regs have been updated since I downloaded them.
     
  7. Jo Ann Meyer Stratton

    Jo Ann Meyer Stratton Elite Member

    25
    Jan 16, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Arizona
    Fannie Mae's (and Freddie Mac and FHA) is to explain any differences that affect value. So if adjustments are larger or smaller than typical for that type of property in that type of neighborhood--then explain. The guidelines are guidelines only and not "rules".
     
  8. Mike Kennedy

    Mike Kennedy Elite Member

    62
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York

    See Para 2. above.
     
  9. DKAYTES

    DKAYTES Junior Member

    0
    Jun 4, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    New Jersey
    Thanks Mary.... That is exactly what I did... infact the 67% comp the reviewer was using was an REO sale... I called that realtor to verify the condition and the circumstances to that particular sale. I always bracket my comps and the 10% line adjustment would not have applied here because it was 7.5%. I thought about that. I take it very personally when this happens. This was only the second time ( hopefully the last time) this has ever happened.
     
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