Comps distance question

[Mike Ault]

But engagement letter said all comps must be within one mile. Otherwise specify...

That represents an unacceptable assignment condition, and you should inform the client that they need to strike that from their engagement letter & instruct appraisers to use the "best" comparables. If they want you to explain why you exceeded some unrealistic expectation of theirs, however, then they have the right to require that.

 

[Carnivore]

In my MLS an appraiser can circle different but similar competing neighborhoods using the map tool. From that the appraiser can produce the 1004mc.

The one mile/6 month/1 year Comparable construct is still around even though the GSE's removed those from the selling guide quite awhile ago. The UW's still use it.

Like others have said, you just have to explain what you did and the why. I use a 1st page before the 1004 1st page. The reason is simple, it is the first thing the UW and AMC Checker Dudes and dudettes see/read.

The Current 1004 has a section s below the grid where you explain things and that page continues to page three.

 

[Tom D]

All you need is a comp to hang your hat on, the rest can be in support of your value. Lising is fine as support. If it helps you look brilliant, winner winner chicken dinner, especially a pending sale. Find conps where parts of them match together.

 

[Surf Cat]

The number of miles radius doesn't even need to be mentioned in an appraisal report. It is a useless way of describing comparability.

I couldn't disagree more. But I suppose, it depends on your market area. In some areas I appraise, a few blocks away makes all the difference in the world to the median sales prices. Whereas other areas, 2 miles away doesn't make any difference at all.

When reading threads about rural appraisals from you rural guys, 10, 15, 30 miles (or more?) appears to be no big deal.

For me, when going outside the subject property's neighborhood boundaries and expanding the search parameters by "miles" (due to the lack of more recent and similar sales to that of the subject), explanation to the reader of the report provides clarity and reasoning if location adjustments are warranted.

This is the especially the case for the OP in the client's 1 mile distance assignment condition requirement. There's no way you can not mention it.

 

[Joe Flacco]

I couldn't disagree more. But I suppose, it depends on your market area. In some areas I appraise, a few blocks away makes all the difference in the world to the median sales prices. Whereas other areas, 2 miles away doesn't make any difference at all.

When reading threads about rural appraisals from you rural guys, 10, 15, 30 miles (or more?) appears to be no big deal.

For me, when going outside the subject property's neighborhood boundaries and expanding the search parameters by "miles" (due to the lack of more recent and similar sales to that of the subject), explanation to the reader of the report provides clarity and reasoning if location adjustments are warranted.

This is the especially the case for the OP in the client's 1 mile distance assignment condition requirement. There's no way you can not mention it.

You agree with me then, Radius is a useless way of describing comparability.

Radius doesn't even belong in appraisal vocabulary.

 

[Joe Flacco]

If the appraiser is searching one mile radius for comps and then expanding it to five mile radius because they need additional comps, that just looks like the appraiser doesn't know the neighborhood or the market area.

 

[gregb]

If the appraiser is searching one mile radius for comps and then expanding it to five mile radius because they need additional comps, that just looks like the appraiser doesn't know the neighborhood or the market area.

Or how to read a street map!

 

[Mike Ault]

When necessary I have used the "circle of comparability" concept. Dealing with rural properties I will consider a property "10 miles west" of a major shopping and employment center comparable to to a property "10 miles east" of the same because the market does. Most buyers are concerned with how long it's going to take them to commute to work, school, or the grocery store. Not which direction they have to travel. Of course, I'm careful not to overlook any legitimate comparables which might be closer to the subject when using this rationale.

 

[J Grant]

I highly doubt the client "required" comps within a mile. Many clients ask for comps within a mile and then instruct the appraiser to comment on it when sales are over a mile.

The distance a buyer might reasonably search for an alternate property varies within an area and also varies with each assignment. Some properties are very immediate location specific, while others might be miles away, the trick is to locate a similar area X miles away that the buyer within the budget and expectations of a subject might choose.

If there are legitimately few sales or few sales similar to the subject found, then a buyer today would be faced with the same limited choices.

 

[Surf Cat]

You agree with me then, Radius is a useless way of describing comparability.

Radius doesn't even belong in appraisal vocabulary.

I'm saying that if you go outside the subject's defined neighborhood boundaries and market area, one should make mention of it in the report to explain why. If there's a median sale price difference, that's going to need explaining too and a possible location adjustment.

In most MLS systems, or public records, if you enter 2 miles out it does so by radius.