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3 Year Sales History On Subject And Comps?

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jsradcliffe

Sophomore Member
Joined
Jan 27, 2003
Professional Status
Certified Residential Appraiser
State
South Carolina
The new USPAP rule requires appraisers to go back up to three years in sales history, Right? I have appraisers tell me that I have to go back three years on the comps also, is this true? I have never been able to find any documentation stating that the appraiser has to go back three years on the comps as well. Someone please clarify this for me.

Thanks,
Jeff
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Many of the lenders have 3 years for the comps also on their supplemental guidelines. To make it easy on yourself, just always do it.
 

Julio E. Sune Jr. (FL)

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Florida
3 Years For The Subject--1 Year For The Comparables*
*Some lenders will come up with their own "variation" and request 3years for everything*
======================================================
USPAP-2003
ADVISORY OPINION 1 (AO-1)
This communication by the Appraisal Standards Board (ASB) does not establish new standards or interpret existing standards. Advisory Opinions are issued to illustrate the applicability of appraisal standards in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems.

SUBJECT: Sales History

APPLICATION: Real Property

THE ISSUE:
The Uniform Standards of Professional Appraisal Practice (USPAP) and supplemental standards issued by others contain sales history requirements that obligate appraisers of real property to analyze and report pending and recent agreements, options, listings, and sales involving the property being appraised. Because of differences in federal law and regulations, state laws and operating practices relating to the disclosure and confidentiality of real property sales data, the ways in which appraisers comply with the sales history requirements vary according to the jurisdiction and the availability of information. This lack of consistency has raised questions regarding the applicability and relevance of the sales history requirements.
How can the appraiser best comply with the sales history provisions of the applicable appraisal standards in the face of obstacles that are beyond the control of the appraiser?

ADVICE FROM THE ASB ON THE ISSUE:
This Advisory Opinion offers advice and guidance for compliance with the requirements to analyze and report sales history and related information in the appraisal of real property.
USPAP Standards Rules 1-5(a) and (B) require an appraiser, when the value opinion to be developed is market value, and if such information is available to the appraiser in the normal course of business, to analyze (1) all agreements of sale, options, or listings of the subject property current as of the effective date of the appraisal and (2) all sales of the subject property that occurred within three (3) years prior to the effective date of the appraisal. USPAP Standards Rules 2-2(a)(ix), (B)(ix), and ©(ix) call for the written appraisal report to contain sufficient information to indicate compliance with the sales history requirement. Standards Rules 2-2(a)(ix), (B)(ix), and ©(ix) further require that, if sales history information is unobtainable, the written appraisal report must include a commentary on the efforts taken by the appraiser to obtain the information.

Supplemental standards issued by government agencies, government sponsored enterprises, or other entities that establish public policy also contain requirements that require the appraiser to analyze and report sales history information, and these requirements vary according to jurisdiction.

The requirement for the appraiser to analyze and report sales history and related information is fundamental to the appraisal process. Just as the appraiser must analyze pending and recent sales of comparable properties, the appraiser must take into account all pending and recent sales of the subject property itself. This is not to say that the agreed price in a pending or recent sale of the subject property is necessarily representative of value as defined in the report, but the appraiser’s failure to analyze and report these facts may exclude important information from the sales comparison approach to value. Information pertaining to the current market status and the sales history of the subject property may also be useful information for the determination of highest and best use or the analysis of market trends.

Sample Sales Histories
The following sample sales histories are offered as examples of information that might be included in an appraisal report in compliance with the applicable standards.

For a property that is not under agreement or option, that is not offered for sale on the open market and that has not changed hands within the past three years, the sales history might be shown in the appraisal report as follows:

Research of the applicable public records, private data services, and an interview of the current owner, revealed that the subject property is not under current agreement or option and is not offered for sale on the open market. Additionally, according to these sources, the subject property has not been transferred during the past three years.

For a property that is offered for sale on the open market and that was acquired by the current owner during the past three years, the sales history to be included in the appraisal report might appear as follows:

The subject property is currently offered for sale at a listing price of $zzz,zzz. A copy of the listing agreement with Mary Smith, real estate broker, is included in the addendum to this report.

The subject property was sold by John Jones to the current owner on June 1, 19XX, for a reported price of $zzz,zzz. The parties to the transaction have affirmed that the seller received all cash and that the reported price was unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. This sale is analyzed in the Sales Comparison Approach section of the appraisal report.

According to the public records, there have been no other transfers of the subject property within the past three years.

Sample Comments
The following sample comments are offered as examples of comments that might be included in an appraisal report in cases where pertinent information is not available to the appraiser in the normal course of business. The comments are fictitious and are offered only for purposes of illustration.
In cases where the property being appraised is known to be the subject of a pending transaction, but the appraiser is not privy to the terms of the pending transaction and the parties to the transaction have declined to disclose the terms of the transaction to the appraiser, the sales history to be included in the appraisal report might include a comment such as the one shown below:

The property being appraised is known to be the subject of a pending purchase and sale agreement, but the appraiser was unable to obtain the terms of the agreement. The current owner confirmed that the property is under agreement but declined to disclose the terms of the agreement or to discuss the nature of the agreement.

In jurisdictions where reliable price information cannot be found in the public records and where the appraiser is unable to obtain complete information in the normal course of business, it would be appropriate to include in the appraisal report a comment similar to the one shown below:

The subject property was sold by John Jones to the current owner on June 1, 19XX, for an unknown price.

The appraiser attempted to obtain the purchase price and other terms of the transaction without success.

The parties to the transaction declined to discuss the terms or conditions of the sale.

According to the public records, there have been no other transfers of the subject property within the past three years.

This Advisory Opinion is based on presumed conditions without investigation or verification of actual circumstances. There is no assurance that this Advisory Opinion represents the only possible solution to the problems discussed or that it applies equally to seemingly similar situations.
Approved December 3, 1990
Revised June 11, 2002

© Copyright 2003 The Appraisal Foundation

:yellowblack:
 

jsradcliffe

Sophomore Member
Joined
Jan 27, 2003
Professional Status
Certified Residential Appraiser
State
South Carolina
That clears it up.

Thank you very much.

Jeff
 
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