Neighborhood Boundries

[Mike Garrett RAA]

Asking questions is not really the issue...being competent to do reviews is. I still contend reviews should be done by senior appraisers with competency in location, property type, and analytical method. Too many trainees are doing reviews.

 

[SANDY]

I need to know what is the correct answer to this puzzling question?
Is there a Definition of what the neighhood boundry is. Does your comps need to fall within the boundries.
I also have my comps within my boundries. I am reviewing a report and all the comps are outside of the boundries with No explanation. Can that be done
Thanks

There can be a difference in neighborhood and market area. Therefore if comps are used outside the neighborhood boundaries it does not mean that they are autmatically not outside the market area. Don't jump to any pre-conceived conclusions--I would concentrate more on determining whether any comps were missed or should have been used in the so-called neighborhood and then determine if there are/were better comps missed in the market area for the subject.
After that's been done thoroughly you can go about nit picking the appraisal's neighborhood boundaries and the location of the comps being outside those boundaries. Neighborhood boundaries can be highly subjective with no one correct answer(but you could always check with your peers--Ha ha ha) so I don't see putting too much effort into arguing about that point in your review. More important to determine if better comps missed and many other much more important issues.

Ok---I am sure that others will beg to differ and will pull out their appraisal manuals for quotes to back them up. I am just saying that we have to pick our battles and arguing about neighborhood boundaries isn't one of the most important ones to spend much time on but if you feel differently, then have at it.

 

[SANDY]

Slightly off point but I have to say this------ while we spend much time discussing/arguing and banging on each other about these finer points of the appraisal process, other non-appraisers and non-appraisal products go about providing the services that our clients want!!!!!!

PS--This is how poundage occurs--many appraisers will read this thread and decide to respond to it with a re-doubling of their efforts in their reports with a much more detailed 2-3 page neighborhood description and then sit back and pat themselves on the back for a job well done. Meanwhile, the users of our services scratch their heads (as their un-skilled, un-trained former McDonalds' chefs that may and I say may read some or all of the report so they can fill out their checklist) and ask why is all this stuff in there when all I want to know is the value of the property.

Have a nice day!!!

 

[Lawrence R.]

I usually approach this problem with a hybrid neighborhood definition. An immediate, contiguous neighborhood, and a neighborhood that is based on the idea of nearby non-contiguous areas that compete in the same market for the same buyers as the subject. I usually refer to it as the "extended marketing area".

"The subjects immediate neighborhood is the 5 acre horse properties on the north side of town. However, properties with similar utility, price, and appeal also exist on the south side of town. Properties in both these areas compete on a equal basis. Comparabies are drawn from both the subject's immediate neighborhood, and the extended marketing area of properties on the south side of town. "

For a review I'd mention that they were fishing off a different dock and didn't provide their basis for doing so. If that was a reasonable choice, I'd leave it at that. If it was a bad choice, I'd hang them out to dry.

I would tend to agree with Metamorphic. Just to sort of springboard, I wouldn't be overwhelmed if the comps came from outside the general immediate marketing area, but if they don't compete for the same buyer, I would expect to see a monetary adjustment, one way or the other to compensate for that.

 

[redfish]

I need to know what is the correct answer to this puzzling question?
Is there a Definition of what the neighhood boundry is. Does your comps need to fall within the boundries.
I also have my comps within my boundries. I am reviewing a report and all the comps are outside of the boundries with No explanation. Can that be done
Thanks

When comparables are utilized outside of original appraisal defined neighborhood locational differences need to be determined with local knowledge of the market area and analysis of predominate values and land values. While the sales utilized may appear to be reasonable physical substitutes the sales may be located in areas of higher/lower predominate values or land values. Determine if the sales are located in a competing neighborhood in the extended market area based on local market knowledge, land values, and predominate values.

 

[Michigan CG]

.....their reports with a much more detailed 2-3 page neighborhood description and then sit back and pat themselves on the back for a job well done. Meanwhile, the users of our services scratch their heads ....... and ask why is all this stuff in there when all I want to know is the value of the property.

Sandy, it is called Scope of Work and client needs/expectations. Competency includes thinking about what your peers would do.

Let me know when you get a $5,000 assignment and think it is ok to turn in a report with a two paragraph neighborhood, two paragraph market analysis, two paragraph neighborhood and two paragraph regional analysis. That will be the last assignment you get from that client.

 

[c w d]

Asking questions is not really the issue...being competent to do reviews is. I still contend reviews should be done by senior appraisers with competency in location, property type, and analytical method. Too many trainees are doing reviews.

I agree, but most of the individuals ordering the reviews don't care. And for as little as $100 I doubt the senior appraiser is going to waste his/her time doing them. What should be and what is will never coincide in this business. Until then lets not discourage those seeking sound advice.

 

[Metamorphic]

A reviewer should not have to ask that question.

Probably when he was a trainee his supervisor thought trainees should not do reviews so he never learned how.

 

[tyfsu]

I have to use a comp or two from about 60 miles away in the report I'm working on now.

Got me beat. My furthest comp from the subject was 52 miles away. It was the closest 1 Mil+ comp that sold within the past 12 months. gotta love those reports. I think that darn report came back 5 different times for stips.

 

[redfish]

Got me beat. My furthest comp from the subject was 52 miles away. It was the closest 1 Mil+ comp that sold within the past 12 months. gotta love those reports. I think that darn report came back 5 different times for stips.

Why were you looking for a 1mill+ sale?