• 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.

Comps with the same builder

Status
Not open for further replies.

grant gryseels

Thread Starter
Freshman Member
Joined
Jan 11, 2006
Professional Status
Certified General Appraiser
State
Texas
Is it a rule or suggestion anywhere in USPAP that you have to have comparable homes built by different builders? I have a house with great comps nearby and recent all with the same builder. I would have to go further back in time to find a comp with a different builder and it really isn't a good comp. Do I need to include it?
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
The preferred is...use at least one comp from a competing builder and a resale which can be from the same builder or a competing builder. Sometimes that is not possible so when that happens explain, explain, explain.

I like to say something like this:

Single builder subdivision, no competing builders in this subdivision. There are no similar sales, ie, size, features, and price range in nearby or competing neighborhoods. Current sales from the same builder are truly the best comparable sales for the subject property. The subdivision is so new there are no resales of the builder's models; therefore, I consider the builder's new home sales to be the "best available comparable sales".

Sometimes it works, sometimes it doesn't. If they still insist on another builder or resale I use it as comp #4 and give it no weight in my value conclusion. Personally, I contend the very best comp is the exact same model, next door, that sold yesterday.

Had one two weeks ago, a John Laing home in the low $400,000s. Two story, about 4,000SF, with full finished basement level on a 4,000SF lot with private drives providing access to the 3 car garages . No rear yards, HOA that includes future amenities. The closest thing would be up-scale townhomes about 3 miles away which, in my opinion, are not comparable to single family detached. Homes in the rest of area which includes about 6 different neighborhoods (subdivisions) top out at around $300,000. There have been more than 15 sales of very similar homes by the same builder in the same subdivision with cash sales, conventional financing, and VA financing. In this case, the product is unique for the location.
 

grant gryseels

Thread Starter
Freshman Member
Joined
Jan 11, 2006
Professional Status
Certified General Appraiser
State
Texas
That should work. Thank you for your time.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
That should work. Thank you for your time.

Grant, you need to read the Fannie Mae guidelines thoroughly. Belton is not a small town. I would bet there are very few basement homes in that town like Mike describes. You need to provide re-sales, sales from other builders, etc. Fannie Mae does not want all your sales to have either the buyer or the seller to be a party to all the transactions. This is a good thing. Otherwise, the builder is setting the price, not competition or the public.

Yes, it will be extra work, but you need to provide additional sales that don't involve the seller or the buyer. Re-sales would best reflect the market as they have been properly exposed to the open market. Not all builder sales are exposed to the open market.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
If you are using the Fannie Mae 1004 form.

From Fannie Mae Selling Guide:

XI, 406.02: Selection of Comparable Sales (06/30/02)

For properties in new subdivisions or for units in new (or recently converted) condominium or PUD projects, the appraiser must compare the subject property to other properties in its general market area as well as to properties within the subject subdivision or project. This comparison should help demonstrate market acceptance of new developments and the properties within them. Generally, the appraiser should select one comparable sale from the subject subdivision or project and one comparable sale from outside the subject subdivision or project. The third comparable sale can be from inside or outside of the subject subdivision or project, as long as the appraiser considers it to be a good indicator of value for the subject property. In selecting the comparables, the appraiser should keep in mind that sales or resales from within the subject subdivision or project are preferable to sales from outside the subdivision or project as long as the developer or builder of the subject property is not involved in the transactions.
 

Scott R Marshall

Senior Member
Joined
Dec 14, 2006
Professional Status
Certified Residential Appraiser
State
New Mexico
The operative word in Tim's post is "new subdivision". Your post wasn't clear whether this is a new subdivision or an older one. If the subdivision is built up with resales, I see no problem with sticking with that particular builder. In fact in many cases, the builder is the most reliable unit of comparision available.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
The operative word in Tim's post is "new subdivision". Your post wasn't clear whether this is a new subdivision or an older one. If the subdivision is built up with resales, I see no problem with sticking with that particular builder. In fact in many cases, the builder is the most reliable unit of comparision available.

Scott, this quote does not just pertain to new subdivisions.

In selecting the comparables, the appraiser should keep in mind that sales or resales from within the subject subdivision or project are preferable to sales from outside the subdivision or project as long as the developer or builder of the subject property is not involved in the transactions.

A few years ago, I appraised a 20 year old duplex and had three MLS re-sales. However, on review the reviewer discovered the same buyer was associated with all three duplex sales. They all had different owners, but one buyer bought each property when they were put on the market. The lender made me provide other sales that did not have a buyer as a party to the transaction. We are a non-disclosure state and I had no idea it was the same buyer, but it was still my job to provide additional sales. Too bad the closest duplex sales were in other towns 5-10 miles away.
 
Last edited:

3 Putt

Member
Joined
Aug 18, 2005
Professional Status
Certified General Appraiser
State
Ohio
The idea is to have something outside of the builders control. What is not wanted is the builder to create their own market.
 

Scott R Marshall

Senior Member
Joined
Dec 14, 2006
Professional Status
Certified Residential Appraiser
State
New Mexico
Tim,


I agree if the builder or developer is involved whether its newer or older, its necessary to find comparables not impacted in the same manner to avoid builders and developers setting up their own market, but even Fannie in that statement is making it clear that "sales or resales from within the subject subdivision or project are preferable".
 
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