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How Do You Handle Comparable Sales/Actives/Pendings?

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Scott R Marshall

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Dec 14, 2006
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Certified Residential Appraiser
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New Mexico
Here is a question that I am looking for some clarification on. On page 2 of the URAR, right above the sales comparison grid, how does everyone handle comparable sales/actives/listings? Do you:

1) Consider all homes within your described neighborhood comparable?

2) Consider all homes within your subdivision and competitive subdivisions?

3) Consider only homes within your subdivision, even it it comes up as 0?

I know different markets react to various amenities in every changing ways, so this question is not meant to address this fact. Everyone's input is greatly appreciated as I would prefer to do my appraisals in a manner consistent with my peers. Once again, thanks in advance!!!
 

Mike Kennedy

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Certified Residential Appraiser
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New York
right above the sales comparison grid, how does everyone handle comparable sales/actives/listings?


Self-explanatory. i.e. not ALL sales / actives / contracted listings ..........JUST the most SIMILAR, RECENT, AND PROXIMATE TRULY COMPETITIVE
 

Scott R Marshall

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Certified Residential Appraiser
State
New Mexico
Mike,


My question was posed in order to try to determine a course of action. I guess my real question is can either or both of those two lines be "0"s or would you say that at a minimum, the sales used within the sales comparision grid qualify as "comparable"? Is it possible to say that you have no sales which you consider truly comparable and yet arrive at an estimate of value for the subject?
 

Tudor

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Aug 15, 2006
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Certified Residential Appraiser
State
Arizona
Scott,

At the minimum you should list the range of comparables used in the report.

Then whatever parameters you have set for doing a search of comparable sales. Apply the same parameters to your active listings. The Active listings may be zero, but I don't see how the comparable properties could be zero.
 

CANative

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Jun 18, 2003
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Retired Appraiser
State
California
Many of my reports have "0" entered in these boxes because most of the proeprty I appraise is truly unique and there are no truly similar sales or listings. No one has ever dinged me (except eApeIT once demanded I enter a numerical figure intead of "see comments.")
 

Hamlet

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Certified Residential Appraiser
State
Ohio
Scott, consider what would a buyer choose as a substitute for the subject. Since most homes are not exactly the same, you have to determine what features are important to those buyers. For example, a 1 story home is going to be compared to other 1 story homes because a buyer who wants a 1 story home is not going to consider walking up and down stairs to get to half of their house. So that is an important consideration to the buyers of 1 story homes. Sometimes it isn’t as easy as staying within the subject subdivision. Suppose someone really wants to buy that type of property, but there is nothing available within that particular subdivision? Is there a subdivision next to this one with a substitute for the buyer? If so, don’t you think the buyer would consider that purchase? If they wouldn’t, then ask yourself why, what makes it different from the subject and therefore not truly comparable?
 

Mike Kennedy

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Sep 28, 2003
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Certified Residential Appraiser
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New York
"the sales used within the sales comparision grid qualify as "comparable"?
Is it possible to say that you have no sales which you consider truly comparable and yet arrive at an estimate of value for the subject?"

If the sales utilized are not comparable:

a. why are they in the grid.

b. perhaps you set your search parameters too narrow re style age GLA utility lot area etc.

c. perhaps you are "gunshy" about "exceeding standard guidelines". (see other thread re utilizing VERY similar older closed sales possibly adjusting them for market conditions EXTRACTED from the market - not arbitrarily)

d. the form is a guideline; see Fannie Guidelines for necessary variance from "standard" time, distance, GLA, age, location with detailed explanation.

e. the market IS what the CURRENT market is. Depending on market conditions, subject type, age, location etc. the Current market may be 1-3 yrs or more.

f. suggest not letting the "form" dictate Market Value. Actives /Contracted Listings (confirmed) AND closed sales should all be considered and utilized.

in short form; assuming one actually inserted Closed Sales in the COMPARABLE grid, then clearly NOT to include them in the Total Number of COMPARABLE Sale within the prior is entirely contradictory.
 
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PropertyEconomics

Elite Member
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Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Many of my reports have "0" entered in these boxes because most of the proeprty I appraise is truly unique and there are no truly similar sales or listings. No one has ever dinged me (except eApeIT once demanded I enter a numerical figure intead of "see comments.")


Greg .. I fully believe your above comment .. however, how do you then reconcile the three comparable sales within your market grid? If they are good enough in the sales comparison section to be classified as comparable sales, should they not also at least be reflected as comparable sales at the top of page 2? It seems inconsistent to me they are counted as comps in one section and not in another.
 

Scott R Marshall

Thread Starter
Senior Member
Joined
Dec 14, 2006
Professional Status
Certified Residential Appraiser
State
New Mexico
Thank you all for the advice so far. Based on comments and advice I've received thus far, it would appear that I should change my ways. I was at times putting "0"s in the comparable sales section stating within my scope of work the criteria being used (typically within a certain % of GLA and within the subdivision/market area with at times other criteria if dealing with an above/below average home). I never once thought that I was contradicting myself by stating I had no comparables I considered truly similar and yet had 3 comparables (or more) on my sales comparison grid. I guess I was trying to say something that both the forms, Fannie/Freddie and appraisal methodology are silent on, that there are properties that are comparable and then there are properties that are really comparable and those are the properties that I was including on those 2 lines with a definition of "comparable" within my scope of work.

In response to Greg's comment and as a question to all, when dealing with truly unique properties, sometimes distances of the "comparables" may be excessive, differences in GLA excessive or various amenities drastically different. Sometimes there may be drastic differences in construction quality, types of obsolescence or other factors that require large adjustments on the sales comparision grid. I am sure we have all had times where our comparables sold at a much higher or lower number than what they adjust out to. If you use 3 (or more) comparables on the grid and include them in the number of comparable closed sales, even though they are drastically different than your subject with large adjustments are we obligated to use the same measuring stick for current listings even though they may not be similar and list prices may be significantly higher or lower than your estimate of value for the subject or should we change the rules and only include truly (in our opinion) comparable listings with an explanation of what we did?

One other question, which I think Mike answered but I'm seeking further clarification. There are times where the comparables used are more than 1 year old. Am I to understand that they should be counted in that space even though the criteria for the form is to comment on only those which have sold within the last 12 months?
 

Tudor

Member
Joined
Aug 15, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
Scott,

I would only list those comparables within the last 12 months. But that doesn's stop you from making further comments on that section in your addendum.
 
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