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Does a Comp Have to Go Through the MLS to Be a Valid Comp?

Terrel L. Shields said:
Reading between the lines in another Working RE Mag article. Tim Andersen wrote "USPAP and the State Board" and seems to imply a comp not in the MLS is not a comp.

I mean I work an area where we have brokers who are not members of the local board. We have a high percentage of rural land tracts that are not sold via the MLS and some developers don't list their lots for sale. They are all private transactions. Further, in commercial property and poultry farms, specialized brokers may list these farms and live 100 or more miles away, not even in the same MLS if they are even a member local to them. The implication is these are not valid sales because the board will want to see the MLS printout.

Comments anyone? Rural appraisers, what do you encounter in your market? I probably find 1 in 4 or 5 sales are not listed even when I search Zillow et al, and it's not listed in an adjacent MLS either. (I live in an area where I encounter 4 MLS's routinely and occasionally one from Missouri where I am not even licensed.
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I think if you can verify on public records that the sale did happen, and have enough qualifying data with which to make comparisons, I wouldn't see why non-MLS comps are any worse.

Especially for outlying areas in my state, the non metro-area MLSs are not tied into the main MLS (looking at you Globe), and even then, they are such small towns with their particular agents that it's usually not that hard to call one up and verify their sale with whats on public records. I definitely benefit from AZ being an open data state, so I can usually follow the paperwork to validate a comp.
 
I have not seen the article in question, but anyone who believes sales that are not in an MLS can not be valid comparable sales has not been around much. The fact is, there is no standard or regulation anywhere that suggests, much less supports, the claim. I spent 25 years working in markets where there were no MLS systems at all, many without any active realtors. The process was to visit the local courthouse, look at all deeds recorded within whatever period I needed to (often to the date of my previous visit), view and make noted from or copy the Assessor cards for those I printed off, take photos of those transfers, and go home to start calling buyers, sellers, brokers, auctioneers, and whoever would answer the phone. Maybe once or twice a year I relied on sales in an MLS to complete an SFR report. You use what you can get. Some say you can't use sales that sold with a contract for deed, or by auction, or were distressed, and on and on and on. Folks making those claims simply haven't yet learned to appraise.
 
Do the Fernando way.
Comps not in MLS are supplemental comps like Comp #4.
If the unlisted Comp supports subject's value, put it in report as further support to your appraised value.
No need to think so hard. You're welcome.
 
Some property types commonly sell between brokers without any open advertising. Prior to Loopnet and a couple of the other online listing services the Broker Exposure model was prevalent among the non-SFR properties. No listings of any kind. Heck, it was common for a broker to handle both ends of the transaction.
 
You can tell if the unlisted comp is a legitimate sale.
If price is significant different than what market should dictate, it's a bad comp and you can't use it.
If you can't tell, be a data collector.
 
In Texas, the biggest issue with using non-MLS sales is verifying sales price - which can only be done via CD/HUD1 sans an MLS listing. With any state, though, I'd think the rub would be in assessing property condition, terms of sale, concessions, etc. when using non-MLS transactions. IRL - so long as they match up with my MLS sales, I'm happy to use them. It's when the non-MLS sales suggest a markedly higher or lower value than the MLS sales that I generally toss 'em.
 
alebrewer said:
In Texas, the biggest issue with using non-MLS sales is verifying sales price - which can only be done via CD/HUD1 sans an MLS listing. With any state, though, I'd think the rub would be in assessing property condition, terms of sale, concessions, etc. when using non-MLS transactions. IRL - so long as they match up with my MLS sales, I'm happy to use them. It's when the non-MLS sales suggest a markedly higher or lower value than the MLS sales that I generally toss 'em.
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Why a sale not verify by assessors records? There must be way of verifying sales in wild west Texas.
 
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