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Expanded Search Criteria For Comparables & 1004mc

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jackimoya

Sophomore Member
Joined
Aug 13, 2008
Professional Status
Certified Residential Appraiser
State
California
If you've had to expand your search for potential comparables because of the lack of data (for example to 25% +/- GLA, historic and non-historic properties when the subject is historic), would you redo the 1004MC to reflect the broadest search used? Or leave it to reflect the initial search results (for example 15% =/- GLA, historic)?
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I would use the search criteria that narrowed down the possible comps for subject ( which could be a wider area, but focused on historic homes for example)
 

BRCJR

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Professional Status
Licensed Appraiser
State
Virginia
If the "expanded" search is not the defined neighborhood you do not include those properties in your MC Form. You may use them if need be but, discuss the need to go out of the neighborhood for your comps. You do not "expand" your neighborhood to suit the search needs. If you "expand" your neighborhood why did you not include that area to begin with?

There is a directive from the GSE's regarding this issue.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
"Instructions: The appraiser must use the information required on this form as the basis for his/her conclusions, and must provide support for those conclusions, regarding housing trends and overall market conditions as reported in the Neighborhood section of the appraisal report form. The appraiser must fill in all the information to the extent it is available and reliable and must provide analysis as indicated below. If any required data is unavailable or is considered unreliable, the appraiser must provide an explanation. It is recognized that not all data sources will be able to provide data for the shaded areas below; if it is available, however, the appraiser must include the data in the analysis. If data sources provide the required information as an average instead of the median, the appraiser should report the available figure and identify it as an average. Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the subject property. The appraiser must explain any anomalies in the data, such as seasonal markets, new construction, foreclosures, etc."

Above is the instructions right on the MC form. Expanding the search for comps to those properties competitive to subject based on what a prospective buyer would consider is not the same thing as expanding "the defined neighborhood". A defined neighborhood can not be expanded, the neighborhood is what is is. A search for comps of course can be expanded .

If the subject has few comps or no comps located in its defined neighborhood, where do you get your comps from? You search areas where a prospective buyer would look, and those would be your comps for the subject, ( per above the instructions right on the form the MC grid wants . )

It makes it easy from there for appraiser to explain in those cases why the comps are not in the defined neighborhood or subdivision.
 
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J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
If the "expanded" search is not the defined neighborhood you do not include those properties in your MC Form. You may use them if need be but, discuss the need to go out of the neighborhood for your comps. You do not "expand" your neighborhood to suit the search needs. If you "expand" your neighborhood why did you not include that area to begin with?

There is a directive from the GSE's regarding this issue.

Can you post the directive you refer to or link for it?
 

jackimoya

Sophomore Member
Joined
Aug 13, 2008
Professional Status
Certified Residential Appraiser
State
California
I actually did not go outside the neighborhood boundaries, just expanded GLA and included non-historic properties. (The small historical districts are scattered throughout the neighborhood).

"Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the subject property."

From my experience in RE sales (15 years ago), most buyers had a maximum price and minimum size (living area and/or bedroom/bath count). They did not have a size range such as we use in appraising. 95% of the buyers I worked with actually looked in several cities, not just one. So....
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I actually did not go outside the neighborhood boundaries, just expanded GLA and included non-historic properties. (The small historical districts are scattered throughout the neighborhood).

"Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the subject property."

From my experience in RE sales (15 years ago), most buyers had a maximum price and minimum size (living area and/or bedroom/bath count). They did not have a size range such as we use in appraising. 95% of the buyers I worked with actually looked in several cities, not just one. So....

I too sold RE, every buyer is different- some want a specific location from day one, others consider a number of locations but then focus on a favorite or favorites. Eventually, they can only buy in one location. So the location they choose, as well as specific house they choose in that location, frames the comps for the subject.

Buyers have a price range, and within that range certain expectation of sf, bedrooms, etc and then house style/property type/key characteristics. A buyer for a historic house is rarely the same buyer as for a non historic house. If my subject is a historic house, the assumption would be it appeals to buyers looking for a historic house, thus the comps for the subject are other historic houses...preferably within close proximity to subject but they may be located in competing but further locations....there are exceptions of course but typically, the competition for a subject are the properties with key characteristics most similar to the subject.

A neighborhood can contain both historic and non historic homes, but if subject is a historic home, are both comps for the subject? What ends up on your grid as the comps?
 

BRCJR

Elite Member
Gold Supporting Member
Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia

Attachments

  • FNMA One-Unit Housing Trends & MC.pdf
    252.5 KB · Views: 18

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
removed because it was not applicable to original poster
 
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