Comments for Why I didn't use Certain Comps

[Fernando]

If there were 10 good comps, you could gotten 3 really good comps with few adjustments in which client would not question your comps.
I wish I had 3 good comps. Lately with few sales during the pandemic, it's been agonizing getting good comps with few adjustments.

 

[Tom4value]

I have a client that gives me these requests a lot so all of my reports have the following comment at the end of my SC comments.
“My search revealed (x amount) of sales that could be considered comparable. Some were considered to support in the reconciliation and some were utilized to support adjustments but only the best (# of comps I used) were used in the sales grid of the report”.

I did notice a reduction in the amount of requests and when they did come, I could just refer to this comment as explanation.

 

[Mike Kennedy]

OP: which of the 10 were:
1. the most proximate
2. the most recent and
3.. the most similar/comparable? The 7 others were not - simply state why (time, distance, less similarity).

A. List the 10, and segregate them into the 3 criteria. (You've already done that analysis - simply INCLUDE IT in the report to support your Market Value OPINION).

B. Then support your opinion by listing the respective Net and Gross % variances of the COMPARABLES.

C. Review Appraisers, Lenders, and Participants in "the deal" can instantly confirm your conclusions and agree with them.

 

[CANative]

I typically include a paragraph at the end of my comments on the sales comparison approach and before the reconciliation of the sales analysis, which discusses data or information NOT included. USPAP discusses this. Something like this...


Comparable Sale 3: 15080 Lakeview Ave - This sale, which also closed in August of 2019 is located in a development closer to Lakeshore Blvd and the center of town. Mix of older homes and older mobile homes. Views are inferior and the small street is subject to some traffic as it feeds the interior neighborhoods from Old Hwy 53. I have not made an adjustment for this as the data is not well documented and I would be relying on experience only. Average quality construction, similar GLA but two bedrooms versus 3 bedrooms. Similar condition or perhaps a little superior but not significantly and an adjustment is not supported. Quality adjustment based on market reaction to the one half or perhaps one whole step in quality rating for the base cost using the assessors handbook (mentioned in the cost approach section) of about $10/sf of the GLA. No other adjustments needed. MV indication of $132,000 with 8% adjustments. Conventional financing. This indication represents the low end of the range and is given less consideration than comparable sales 1 and 2 which are proximate to the subject.

Other data considered:

There is one active listing of a manufactured home in the neighborhood and which is located on the subject's street. I did not consider it a competitive property and have not included it in the presentation of comparable sales and listings. 6139 Vallejo Avenue (CRMLS#LC20028738) is the listing of an older (1968) pre-HUD mobile home in fair condition. The lot size is very large. Listed at $70,000 with 40 days on market. It appears the value is in the entitled site and there is little, if any, contributory value left in the dwelling unit.

 

[RCA]

I get these stupid request asking me to explain why certain comps were not used. For example, a cookie cutter neighborhood may have 10 good comps. All are basically the same thing. I pretty just pick three or four although I can use any of them. Looking for the best way to explain this to the client.

You should analyze all competing properties. The fact that you only choose 3-6 for your sales grid should not imply those were the only homes you analyzed or used as comps. If you have done a good analysis, then you should be able to do a pretty good job of adjusting sales price differences between even quite different homes.

Confining your comps to the most similar properties is for handicapped appraisers. In fact, if your comps are all the same ... the reader is left to wonder whether you even created a price adjustment model, whether you have really done a competent analysis of sales comparables.

No, you show your competence by using somewhat varied comps and doing a good job on adjustments.

You tell your client you analyzed all sales transactions you considered to be for competing properties, - but only include a random sample for your sales grid. I would recommend however, trying to include a dozen comps in the sales grid ---- That is in my opinion the optimal number. (But of course you will need to have automated your work, to make that practical.)

 

[George Hatch]

*In those assignments* we certify to "most similar". We don't certify to bracketing or randoms. If a user has a bracketing requirement then that's arguably a user-driven extra to be added, not a substitute for "most similar".

 

[Mejappz]

Not a comment, but I add an addenda of the Sales considered but did not use in the grid.

 

[CANative]

Not a comment, but I add an addenda of the Sales considered but did not use in the grid.

I subscribed to three MLS systems and all of them had a capability of listing all the sales and listings (as a spreadsheet) that were included in the MC addendum. I write it to PDF and include it in an exhibit page.

 

[George Hatch]

I've taken to using screengrabs and inserting as an image.

 

[CANative]

Just as good. In CF, inserting a pdf directly into the report gets a pretty clean copy. But that hardly matters.