Does Zip Code Matter?

[genevolpe]

We are getting ready to do a deal in Philadelphia, PA. The property that we have is on the border of (3) separate zip codes (19141, 19126 & 19138 to be exact). When we get an appraisal, will COMPS in other zips be used? From your experiences, what is the general rule concerning multiple zips in an appraisal?

Thanks in advance.
-Gene

 

[The Warrior Monk]

There is no general rule.

In my practice, zip code does not matter. What does matter more often is location in a certain school district, location in or out of a village, etc.

Others are may be different.

 

[Paul Isolda]

I agree with David. On rare occasion, a property on the fringe of another zip code may have the zip code and therefore mailing address of a more desirable area. This may have a positive effect on the value. What's usually most important is the school district and where the taxes are paid. An appraiser with local knowledge should know where to go for appropriate comparables.

 

[Pilgrum]

What matteres is
market area;
The geographic or locational delineation of the market for a specific category of real estate, i.e., the area in which alternative, similar properties effectively compete with the subject property in the minds of probable, potential purchasers and users.

 

[DMZwerg]

Exact neighborhood often matters more, and as for the greater local market beyond just the specific neighborhood as Mr. Wimpelberg stated school district (and particularly elementary school) can often be next.

Some appraisers may do searches for comparables based on zip codes but good ones, realizing the borders, will search more than one or search by other factors, as appropriate.

Hope that helps!

 

[Walter Kirk]

There are buyers in the Main Line suburbs who will pay a premium for some zip codes or postal addresses. In Philadelphia there was a time when a premium was paid for properties located in certain church parishes. There are other areas of the city that some buyers consider more valuable because of their proximity to a temple. In this case you must determine whether the neighborhood characteristics are similar.

It seems that some appraisers locate comps in Philadelphia by zip code because that is the way that they are listed in thr MLS. A good local appraiser will ignore artificial classifications and apply his own knowledge of the market.

 

[The Warrior Monk]

Out in my neck of the woods, there is a zip code that includes two incorporate villages and one hamlet...all different neighborhoods.

 

[JTip]

Really no general rule about zip codes, more of a market area question.

IMM, in the town our office is in there are 4 zip codes in a 1/4 mile radius. All three of these zip codes go to the same school and are in the same township but different city addresses and zips. I'm sure it looks strange to the UW when they first look at the sales.

4 zips, 4 post offices, 4 postmaster generals and a slurry of postmen. No wonder they need to close on Saturdays.

 

[Scott Kibler]

Sometimes it matters a great deal. Sometimes it does not matter at all. It depends on the idiosyncrasies of a specific market. I'd poll a few experienced local real estate professionals in your area to determine if it matters for the property in question.

 

[Mike Kennedy]

It matters to lenders who swear by the National Indices such as Case-Shiller and others when they do Automated Valuation checks based on zip codes which typically do NOT make any distinction between actual site location. It matters when MLS listings inputted by zip code are utilized by real estate agents in CMAS and BPOS to arrive at List Price recommendations to sellers. It matters when OUT-OF-MARKET so-called (a)ppraisers without the proven Competency to complete an assignment, are assigned, and accept, appraisals by lenders and/or their Appraisal Management Companies simply by Zip Code then choose "comparable sales" by Zip Code.

It matters.