• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Comparables Check List?

Status
Not open for further replies.

tedflanders

Sophomore Member
Joined
May 29, 2003
I know what I need for a comparable, but it seems to be the hardest part of my appraisal. What order/things do you guys look for while coming up with your comps? Do you start with price? Location? Square feet? I am trying to get a "system" down to speed up this process. Any help would be appreciated.

Thanks,
Ted
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
TEd, your right. Thats the hardest part of any appraisal. ;)

What you look for will depend on your market. How your buyers react. In my area I typical start my search with square footage, age and city. I put in a price range well above and below to eliminate obviously non comparable properties.

Now we have a small market and few comps to pick from. But you might to narrow yours down to neighborhood(s) bedroom counts, baths, etc. Again it all depends on what your buyers want and expect.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I always start with location, narrowed down to the subject's specific neighborhood if possible, with a very wide price range (for example, 0-$500,000) over the past 6 months. Then I sort by square footage. If that doesn't produce enough comps then I'll widen the neighborhood search a little bit at a time to include the closest competitive areas with more specific criteria such as site size (if the subject site size isn't typical), bedroom count (especially if the subject only has one or two bedrooms) and year of construction.

I do the same identical search process for active listings, which tends give me a clue to which direction the market is going as well as giving a clearer picture if some of the higher or lower priced sales were just flukes.

If this order of searching produces a bounty of comps, then I'll narrow my search down to the most recent sales, which will be most reflective of the current market. If there are still too few sales I'll increase the sales dates up to one year.

Price should be your last option because that could eliminate a home that is identical to the subject and right next door that sold yesterday. Price (or estimated market value) is what you extract from the market data, not how you choose your comparables. By doing so it would be the equivalent of starting your report with the value estimate on page two of the URAR, then working backward to fill in the blanks, adjusting the comp grid to justify the end conclusion.

Number hitters are notorious for searching by price first, and most do not analyze active listings.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Thanks Pam.

I wanted to add that Ted's inquiry is a very important one that all newbies should pay extremely close attention to.

In the search for mentors it's very difficult for someone new to the business to determine if their employer is ethical or not. How the mentor teaches comp searching can be a VERY telling clue.
 

tedflanders

Sophomore Member
Joined
May 29, 2003
Thanks Dee, you do it a little different than I do. Now I will try it your way and go from there!
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Good post Dee Dee!

I would say ....

It depends on how your MLS is organized. Here is how I do it (giving away my secrets again, sigh)

Step one: Look up the public record on the subject property. We can get the assessor's record on line. There are links for zoning, plat map, sales history, and building information including room count and square footage. Soon we will also be able to get the property card with the drawing.

Step two: Look up the MLS information. Our MLS keeps listings on file for five (5) years. If it is a refi, you might be able to find an old listing. The listings give us the geographically coordinates so we can do a one square mile grid search around our subject. If nothing shows up on your subject, just do a street search and pick an address close to your subject property to get the MLS coordinates.

Step three: Do a Comparative Market Analysis (CMA) for that square mile. This will give you information needed for the neighborhood section of the URAR such as single family price range, age range, days on the market, and percentage of list price to sales price ratio.

Step four: Now I am ready to search for solds to use as comparables. If possible, I use only MLS sales because I know these are usually arm's length and I have a source to verify the data. If I can't find any, I go to the public record for sales not through MLS.

1. Price 0 to 1,000,000
2. Location within that one mile grid
3. Sales date back seven months
5. Size bracket within 10% of the subject property
6. Style ranch to ranch, 2 story to 2 story
7. Garage stalls eliminates having to make a large adjustment

Step five: Once I have a number of comps to choose from, I select what I believe to be the best beginning with the most current sales date and working back. Notice that by doing my steps you will have comparables that meet all of the Fannie Mae guidelines. I like to eliminate the high sale and the low sale, work from the median or mode.

Step six: This will be controversial but I am going to say it anyway. Once I have found the comparables, I then select those that bracket the sales price or refi price of the subject property, some higher, some lower.

Step seven: Always have four or five comps when you go out on the inspection. Photograph all of them. Sometimes when you put them on the grid something will not work out...this way you don't have to make a 2nd trip.

Step eight: Put the comps on the grid, make your adjustments...hopefully you won't have to do too many. Fine tune the grid by making your square footage adjustment last. Round to nearest $500 or $100 dollars in the grid. Round your final value conclusion to the nearest $500 or $1,000.

If you are using Wintotal, use the comps data base to save your comparable and also "weight" your comps. You can move them around in this feature...I like to use the one with the most weight as comp #1.

Lastly, run the Reviewer to see if you left anything out. Run the spell checker to see that you don't have a bunch of mis-spelled words in your report.

I hope you find this helpful!
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Originally posted by Mike Garrett, RAA@Jul 23 2003, 07:31 AM
Step six: This will be controversial but I am going to say it anyway. Once I have found the comparables, I then select those that bracket the sales price or refi price of the subject property, some higher, some lower.

Okay, I'll play ball on this one. ;)

I would add one more step between your #5 and #6 that would include looking very closely at the overall condition and upgrades of the comps and how they compare to the subject. Then I would throw out those which are least comparable.

Far too often I see appraisals where the comps seem like perfect matches to the subject, but the appraiser either doesn't make adjustments at all when the subject is clearly inferior, or the adjustments are so minimal that they skew the value estimate to be high.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Ted,

You're very, very welcome.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks