Can the house I am buying be used as a comp for itself since it sold in March

[MBD]

According to the Fannie Mae memo "XI, 406.02: Selection of Comparable Sales (06/30/02)," "The appraiser may use the subject property as a fourth comparable sale or as supporting data if the property previously was sold (and closed or settled)."

If the subject's prior sale was an arm's length transaction, and there wasn't anything unusual about the sale, it is good practice to use this prior sale as a comparable. If there is a change in market conditions (prices increasing or decreasing), the appraiser should apply a time adjustment based on the prior contract date (not closing date).

 

[golandmark]

Lenders frown on the subject being used as a comp and do not allow it to be one of the primary (where ever that term came from) comps. Primary comps are comps 1-3. In a residential mortgage transaction three comps are required. The lender is also concerned about flipping and terms of transaction when evaluating comparable viability (and the appraiser should be too). I would say that the subject as a comp would be a strong consideration but should not be the basis of the appraisal process. But, let me ask you a question...If you are buying a car, do you consider what the person paid for it six months ago? Or...Do you consider the car's current condition, what similar but different cars are selling for, and rate the price you might pay in consideration of comparable car prices? I would say that it is irrelevant what the car sold for six months ago when determining market value. I don't think the subject can be a substitute for itself. The basis of the sales comparison approach primarily employed and considered in residential appraisals. I would say that a comparable needs to be comparable and interchangeable with the subject not THE SUBJECT. That's my opinion. That being said, the principle of substitution does have to look at SOLD comps which inherently have sold prior to the effective date of an appraisal. I would say that the prior sale of the subject is a reference point and possibly a value ceiling in a stable market. In other words, if the subject sold for 180,000 six months ago and comps in an adjacent neighborhood are selling in the 200,000 range then the 180,000 might actually be a cap on the value

 

[Delta85]

Although allowable, I'd rather not use the subject as a comparable if I can avoid it. To me it just feels like I should be able to support my opinion based on a pattern of activity outside of the subjects universe.