Comps Across State Lines

[Steve74]

Is it the general practice not to cross state lines for a comp?

We live in WV, 1/4 mile from the MD border and had an appraisal done in 2014. All the comps were property in MD, but we recently had a new appraisal done and all the comps were in WV. The recent appraiser said he doesn't usually cross state lines for comps due to different taxes and school districts.

It is especially relevant in our situation because we are 6 miles from Deep Creek Lake, which is a popular vacation spot and home values are much higher there than in the rest of the region, which is very rural. In fact, we had the first appraiser to contact us turn down the job because they said they did not have good data on the lake properties. All the comps from the recent appraisal were at least 6 miles or more in the opposite direction, so we feel the appraisal is undervaluing the property based on the location.

It is true that the school district in our county is less desirable than the one in MD. On the other hand, we feel like we are in a good spot because our taxes are incredibly low (almost by an order of magnitude) compared to the MD county, but we enjoy beautifully maintained MD roads all the way to town, save the first quarter mile.

I was hoping to get a sense of the general thought on state lines.

 

[Walter Kirk]

Generally speaking an appraiser should not cross state lines to find comparables, there are too many variables. One state may have a higher property tax rate than its neighbor, or may have a higher state income tax, personal property tax or other economic differences. The proper way to address the property that you describe is to go back in time and compare lakeside property sales to non lakeside property sales and develop a location adjustment which can be applied to the non lakeside comparables .

 

[Restrain]

Unless you have a very unique property , I would consider crossing a state line as a big no-no. As a bit of background. I grew up and worked in Texarkana, Texas. There are two separate cities, Texarkana, Texas and Texarkana, Arkansas. There is a definite market difference from one city to the other and the use of sales from one state in the other would definitely yield improper results. From this micro-market this indicates that cross-state comps are from the most part is not appropriate.

 

[Terrel L. Shields]

Another recent thread about that, commercial and agri not so important but residential usually stick to the state. Exceptions would be very sparsely populated areas like panhandle of Oklahoma, West TX/NM etc. The difference can be much less.

 

[Joe Flacco]

It would be good appraisal practice to include at least one or two WV properties that are similar distance to Deep Creek. Including only MD properties between Deep Creek and the WV line raises some questions.