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Advice On When There Is No Comparable Data

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Valueseeker

Junior Member
Joined
May 19, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Hey guys,

I turned this order down but I was curious how you experienced guys would have chosen comps.
This was a newer four family in a small town where no 4 family sales exists within the past 12 months. There were a few within 24 months but I would not be able to bracket GLA or age (these were far older homes). Competing towns didnt provide much sales data within the last 12 months. Would you just go further back in time? If so how far would you go? Im looking to get an understanding as to what the best approach would be when and if I come across something like this again.

Thanks
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
back in time, expand area, rely more on income approach. Depends how hard you want to work...comps still have to make sense even if older or further away.
 

Sid Holderly

Senior Member
Gold Supporting Member
Joined
Jun 16, 2005
Professional Status
Certified Residential Appraiser
State
Indiana
Search 3 years and include 3 to 5 units or more over a wider age range. In this area the #/unit or $/sf would be similar if not in a depressed area and that is what I would bracket. That would work for a local banker, but AMC ?? Add another day or 2 to the research and request a fee to support the time.
 

Valueseeker

Junior Member
Joined
May 19, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Its an AMC. I tend to cherry pick but Id like to gradually challenge myself with something like this one. @J Grant, this sounds awful but I have never (to date) relied on the income approach for final reconcilation. Its only supported my sales. Would it fly over well if you relied completely on it or are you saving giving both some weight?
 

Peter LeQuire

Elite Member
Joined
Jan 3, 2005
Professional Status
Retired Appraiser
State
Tennessee
If you're required to use the FNMA/FHLMC report forms, you probably ought to read Certification 4. If you don't have data to develop a reliable report, you probably ought to not take the assignment on. Even if there is data somewhere, it may not be a profitable assignment.
 

Michigan CG

Moderator
Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
For lending they will want the most reliance on the SCA. A four-unit property buyer is buying for the income. I would not worry about bracketing GLA. I would worry more about condition and utility and find those properties that have similar utility, condition and appeal as the subject property.

If I were buying a four-unit property I (personally) would look at income first. The report should convey sales that while are not similar in age are similar in desirability to the investor.
 

Valueseeker

Junior Member
Joined
May 19, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Great Thanks guys. I did turn it down because I know Id be hung up on it for awhile just wasting my time.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
We can not use only the income approach for res small income, but can rely on it more perhaps when sales are hard to come by. Then again we derive our GRM from sales so there has to be some to base value on. Read the certs that say there was enough data to form a reliable sales comparison approach.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Its an AMC. I tend to cherry pick but Id like to gradually challenge myself with something like this one. @J Grant, this sounds awful but I have never (to date) relied on the income approach for final reconcilation. Its only supported my sales. Would it fly over well if you relied completely on it or are you saving giving both some weight?

we are not allowed to rely completely on it to develop the appraisal for res small income for Fannie FHA etc...(even if a buyer or investor would on income approach)
 

AMF13

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Even when I have decent sales, frequently they have no rental data, so the income approach is not so reliable.
 
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