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

[Dublin ohio]

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 is obvious that either: The request was misstated and meant subdivision. You limited your neighborhood description to be the subdivision. The person who made the request is bat crap crazy

 

[Sadie]

"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.

This is the part I was referring to.:

Additional Requirements for New (or Recently Converted) Condos, Subdivisions, or PUDS​

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.

 

[Mark K]

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.

Had the exact situation quite a few years ago. Local custom builder bought 30 acres and put in a subdivision for custom homes. However he restricted the builders to one, himself. Back then I appraised a LOT of new custom construction, probably 100+/year, so I knew the costs and the profits from the other builders. This guy was routinely charging 5-10% more for the homes in his sub...because he could. I always used a couple of comps outside of his sub and the appraised values were always "low" for his homes in that sub.

Needless to say, we butted heads a few times but the S&L always agreed with me. This S&L was pretty knowledgeable about local values and since they kept all their loans in-house (nothing sold to F/F) they had a vested interest in reasonably accurate valuations.

 

[shrubberyvaluation]

This is the part I was referring to.:

Additional Requirements for New (or Recently Converted) Condos, Subdivisions, or PUDS​

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.

I see nothing in there about having to leave the neighborhood for a comp. It only states outside of the subdivision or PUD. Meaning competing communities in the subject's neighborhood are acceptable. Some people earlier in the thread were telling me it was always a requirement for Fannie to get a comp outside the subject's neighborhood. I had just never seen that requirement before.

 

[Sadie]

I see nothing in there about having to leave the neighborhood for a comp. It only states outside of the subdivision or PUD. Meaning competing communities in the subject's neighborhood are acceptable. Some people earlier in the thread were telling me it was always a requirement for Fannie to get a comp outside the subject's neighborhood. I had just never seen that requirement before.

Here:
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.

 

[shrubberyvaluation]

Here:
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.

shrubberyvaluation said:
I see nothing in there about having to leave the neighborhood for a comp. It only states outside of the subdivision or PUD. Meaning competing communities in the subject's neighborhood are acceptable. Some people earlier in the thread were telling me it was always a requirement for Fannie to get a comp outside the subject's neighborhood. I had just never seen that requirement before.

Correct. There is no requirement to leave the neighborhood for a comp. You just need one outside the condo project, subdividion, or PUD.

 

[Sadie]

I see nothing in there about having to leave the neighborhood for a comp. It only states outside of the subdivision or PUD. Meaning competing communities in the subject's neighborhood are acceptable. Some people earlier in the thread were telling me it was always a requirement for Fannie to get a comp outside the subject's neighborhood. I had just never seen that requirement before.

I think as someone pointed out, the client was confusing neighborhood and subdivision. It's been around for a long time and I forget about it every now and then. But I have not had a report come back for it.