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Condo Comps

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Phil Rice

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Joined
Apr 22, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Condo appraisal.

I have 3 good comps from the same condo complex. I make minimal or no adjustments, include interior and exterior photos, seems very straightforward. I get an underwriter request for a comp outside the complex.

Should I make it “standard procedure” to include at least one comp from a competing complex, even if it is not very meaningful? Is this based on a lender (FANNY MAE) guideline, and if so, what do I need to know about this guideline?

For example, if the subject is in the top complex, and best comp from another complex sold for less $$ even though GLA and amenities are about the same, I would adjust for condition and maybe location. This does not seem like it adds any value to the report.

I could just include 4 comps, but I am reluctant to make this my “standard procedure” unless it is what my peers are doing.
 

Carnivore

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Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Phil,

Lots of lenders are skitsih over condos. If all your comps are re-sales, than you could make a great case for saying the request serves no purpose of ther than additional work and you could charge the client for that unnecessary work.

Now if this is a new developement than maybe it would be a good idea and go get the competition.

Your sale from another developement with proper market derived adjustments should grid out to what your original three indicate.

Hope that was helpful.

One more point I would like to add. Many appraisers, especially trainee dont understand the nuances of condo appraising. It appears easy, but in my experiance it has always been harder.

good luck
 

Phil Rice

Member
Joined
Apr 22, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
My question is about resale comps in a well established complex, 8 to 10 years old.

Thanks Andrew, I did not even think about a new condo. If I ran into a new condo, the request for a comp outside the complex would make sense to me.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Phil:

I have lately made it a practice to include in my rough draft a 4th (out of complex) condo unit - if the client has not prespecified this requirement. Many are now including it as a supplimental requirement.

Then I have the data ready along with my comment that it was considered, but not weighted in the original analysis.

Depending on the client I do charge them for the added (near) useless comp. Since the original report DOES state why no out of complex units were used :twisted: the only purpose of the requirement is a lender checklist... and if they don't let us KNOW whats on their 'secret' checklist before we do the work: who's problem is it anyway :p .
 

John Wilson

Junior Member
Joined
May 1, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
Originally posted by Phil Rice@Jun 18 2003, 09:28 AM
I have 3 good comps from the same condo complex.
I use two in and one out. If's there's no good comps out, it's 3 in.

Unlike Andrew, I'd take condo's exclusively, if I could.

Minimal adjustments, easy sketch, short form, check please.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
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North Carolina
Originally posted by John Wilson@Jun 18 2003, 10:17 AM

Unlike Andrew, I'd take condo's exclusively, if I could.

John,

I think you might have mis-read my post. I would take them exclusively also, due the the ease of data basing, less travel time ect, ect.

My comment was meant to inform people that the condo apraisal is a differnt animal.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I've had the same request for "out of complex" comps before, but not too often. The problem I have seen, in the past, is that condos can vary wildly in price, but not much so in quality or features. Then I start to look into the association and its' management. <_< Quizing some HO's can give a lot of info into the attitude of "The Association".

I don't know where I'm going with this, other than brainless ramblings, but if the HO's are not happy, the market will know about it. :mellow:
 

Dale Smalley

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Some large condo projects can be considered a market onto themselves therfore no outside comps are needed. But it depends on the complex.
 

Mike Garrett RAA

Elite Member
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Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
What is the best possible comp? The exact same model, next door, that sold yesterday. Asking for a comp from a competing property is akin to kissing your sister...a big waste of time. Condo properties usually are unique in features and location. Trying to find a truely competing property is oft times impossible.

Who should be the judge of what is comparable? You or some underwriter off in California or Texas? I always include comments as to why I selected sales within the same complex and rarely ever get ask for a comp from a competing project.

It's the same thing with single builder subdivisions. Have had underwriters tell me I can't use the exact same model next door because it was built by the same builder. Great logic. Lets compare Cadillacs to Fords just so someone who has never done an appraisal in their life can be happy.

We are the appraisers, we know the market...it's our butt if we screw up. We got a call today on a dumpy little house in a cheap neighborhood. My apprentice called the condition "Below Average" on my recommendation. The underwriter rejected the appraisal saying..."we will not accept any appraisal where the condition is less than average" I said, "fine, will you accept "fair" for the condition? Nope had to be average or they cannot do the loan. "Good, I said..."looks like you just lost the loan". End of discussion.
 

TC

Elite Member
Gold Supporting Member
Joined
Jan 31, 2002
Professional Status
Certified Residential Appraiser
State
Pennsylvania
Rule of thumb is 1 outside if the development if still under construction. Lender likes to know if similar plans are viable in that market. If the plan is totally complete, lender will usually accept 3 from that plan. However, a 4th outside never hurts.

Mike,

been there on that "fair" rating. Would not back down to a UW just recently, had the interior photos to prove it. Got paid, but not sure if the loan closed.

TC
 
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