Assignment conditions - Use At Least One Comparable Outside of Subject Neighborhood

[jay trotta]

I have done enough things that I thought were common sense over the years that turned out to be wrong. Made a stupid mistake of not asking my client a condo unit number years back when it was not on the order. I checked the contract and saw it was unit 1. Of course after inspecting and looking at more of the contract I found out there was an addendum that they switched to buying unit 2. On a side note how does fannie define subdivision or project. If you have say "New Estates 1" "New Estates 2" "New Estates 3" etc are these separate and considered outside of the subject project if between these? Like your subject is in "New Estates 3" and there iare reales in "New Estates 1" do you still need sales from other areas?

So you are Not a trainee ?? as noted

 

[TerryRohrer]

It would be misleading because I am skipping over all the comps in the subject's neighborhood to use a sale that is not relevant for the valuation.

You have no duty to skip over anything. When I have to deal with such requirements (more typically listings), I simply include it as the 4th comp and state that it is included to meet assignment conditions and was not considered in my analysis or weighted in my conclusions if it proved of no use to me in reaching my conclusions.

 

[Tim Hicks (Texas)]

It has been a Fannie Mae guideline for as long as I can remember.

 

[Sadie]

Here from the horse's mouth so to speak. Requirements and explanation

Comparable Sales | Fannie Mae

This topic contains information on selection of comparable sales, including:

selling-guide.fanniemae.com

 

[shrubberyvaluation]

Here from the horse's mouth so to speak. Requirements and explanation

Comparable Sales | Fannie Mae

This topic contains information on selection of comparable sales, including:

selling-guide.fanniemae.com

"Fannie Mae does allow for the use of comparable sales that are located in competing neighborhoods, as these may simply be the best comparables available and the most appropriate for the appraiser’s analysis. If this situation arises, the appraiser must not expand the neighborhood boundaries just to encompass the comparables selected. The appraiser must indicate the comparables are from a competing neighborhood and address any differences that exist. The appraiser must also provide an explanation as to why he or she used the specific comparable sales in the appraisal report and include a discussion of how a competing neighborhood is comparable to the subject neighborhood."

So I would explain that I used a sale outside of the neighborhood boundaries to meet client requirements. It is a little ambiguous as this seems to be discussing it as if leaving the neighborhood is due to better comparables, not because of client requirements. Thank you.

 

[shrubberyvaluation]

It has been a Fannie Mae guideline for as long as I can remember.

I never heard of it. I have always used resales, sales from other builders, and sales from competing communities from within the subject's neighborhood. I have never heard of needing a comp outside of the neighborhood boundaries for Fannie Mae.

 

[Tim Hicks (Texas)]

I never heard of it. I have always used resales, sales from other builders, and sales from competing communities from within the subject's neighborhood. I have never heard of needing a comp outside of the neighborhood boundaries for Fannie Mae.

It does not say "outside the neighborhood boundaries." Have you ever read the Fannie Mae Selling Guide for underwriting appraisals section? If you haven't, take the time the education will be invaluable.

 

[shrubberyvaluation]

It does not say "outside the neighborhood boundaries." Have you ever read the Fannie Mae Selling Guide for underwriting appraisals section? If you haven't, take the time the education will be invaluable.

I have. I could of missed it, but I never saw any requirement to go outside of the neighborhood boundaries as defined on page 1 for at least 1 comp for new construction. I see no requirements for it here. Is it somewhere else? I have always used these guidelines.

"
If the subject property is located in a new (or recently converted) condo project, subdivision, or PUD, it must be compared to other properties in the same market area and to properties within the subject condo project, subdivision, or PUD. This comparison should help demonstrate market acceptance of new developments and the properties within them. Generally, a subdivision is considered new when there are limited or no resales or the builder or developer is involved in the marketing or sale of the properties. See B4-2.1-01, General Information on Project Standards and B4-2.3-01, Eligibility Requirements for Units in PUD Projects for the definition of a new condo project or PUD.

At a minimum, the appraisal report for these properties must include the following:

• At least one settled comparable sale from the subject condo project, subdivision, or PUD. (A resale is preferable if it is verifiable and does not involve the subject builder or developer).
• At least one settled comparable sale from outside the subject condo project, subdivision, or PUD.
• A third settled comparable sale can be from inside or outside of the subject condo project, subdivision, or PUD. Settled comparable sales or resales from within the subject condo project, subdivision, or PUD are preferable to settled sales from outside the condo project, subdivision, or PUD provided the builder or developer of the subject property is not involved in those transactions.

If the subject property is part of a newly built or recently converted condo project, subdivision, or PUD that has 2-20 units and there are no settled or pending sales, the appraiser may use comparable sales from a competing project, subdivision, or PUD. The requirements in the following table apply.

 

[Elliott]

For some reason I feel that I'm rubbing my nose on a grid stone, but anyway. What Fannie or FHA or whoever wants to see is not 3 or 4 sales in the same subdivision of the same property by the same builder. I mean how many times have GSEs lost a ton of money when a builder, salesman, lender has scammed them? They are looking for that 'objective' sale in the market that isn't under the same influence as the subject and the other stuff he is building.

 

[shrubberyvaluation]

For some reason I feel that I'm rubbing my nose on a grid stone, but anyway. What Fannie or FHA or whoever wants to see is not 3 or 4 sales in the same subdivision of the same property by the same builder. I mean how many times have GSEs lost a ton of money when a builder, salesman, lender has scammed them? They are looking for that 'objective' sale in the market that isn't under the same influence as the subject and the other stuff he is building.

Bingo