How Many Comparables Are Too Many

[Mr Rex]

Bracketing every difference for the sake of bracketing doesn't create a more credible opinion of value.

 

[Zephyr999]

Bracketing every difference for the sake of bracketing doesn't create a more credible opinion of value.

True statement...not to disagree, but to broaden the conversation further...
What I've discovered in some review assignments (outside the lending arena) is instances where focus on bracketing the individual property differences caused 'appraiser myopathy' as the lower end of adjusted price ended above highest unadjusted price.

 

[J Grant]

Bracketing for the sake of bracketing is silly, but bracketing to find out what market paid for X $, or what market penalized for Y$, does make a report more credible.

Imo bracketing should be done for high value or important items, not nonsense like a half bath, or fireplace...some reviewers go by checklist and ask for that I explain why it was not possible to do or the value difference so marginal not materially of affect, an appraiser can always reconcile lower or higher around a feature that was not bracketed.

 

[DWiley]

I don't think there is a magic number of comps, but i have sure seen reports that would have been more credible with fewer comps. Too many times additional sales are added to the truly comparable, and that often results in internal inconsistency in the adjustment grid. Often the 3 to 5 best sales provide a much better picture than throwing in a bunch of other sales that are not really comparable. More is certainly not always better.

 

[Deleted member 152047]

I don't think there is a magic number of comps, but i have sure seen reports that would have been more credible with fewer comps. Too many times additional sales are added to the truly comparable, and that often results in internal inconsistency in the adjustment grid. Often the 3 to 5 best sales provide a much better picture than throwing in a bunch of other sales that are not really comparable. More is certainly not always better.

Nah, I say carpet bomb them with information so they don't know up from down

 

[Tom Woolford]

Sometimes I'll grid as many as 8 for on form for paired sales analysis, but usually always whittle it down. Save all the comp pages to the workfile and only submit those best supporting.

 

[Mark K]

. Here is an appraisal from a ways back:

Comp Adj. Sale Price % Diff
Comp 1, $1,213,195, 0.03%
Comp 2, $1,211,799, 0.08%
Comp 3, $1,214,924, 0.18%
Comp 4, $1,215,866, 0.25%
Comp 5, $1,207,219 , 0.46%
Comp 6, $1,206,509, 0.52%
Comp 7, $1,230,169, 1.43%
Comp 8, $1,192,095, 1.71%
Comp 9, $1,235,656, 1.88%
Comp 10, $1,238,876, 2.15%
Comp 11, $1,174,596, 3.15%
Comp 12, $1,173,149, 3.27%
Comp 13, $1,252,709, 3.29%
Average $1,212,797

Market value $1.2M, +/-. Adj sales prices reported out to $1 accuracy?

Wow!

Why didn't you go on out to 2 or 3 decimal places?

 

[Don Clark]

i'm similar to chad. i use as many as necessary but i have yet to run into a situation where i needed 6 closed sales. typically 3-5 as needed, same for listings - as needed. i have seen many times while reviewing where appraisers add a sale (not a comp) just to bracket a single feature which results in a lesser appraisal imo because it is not really a comp, just something with more/less of feature X. some even go so far as you explain that "comp 5 was added to bracket the subject's lot" or something similar when it is anything but comparable.

Same here. i usually use 4 but on occasion I have used 5. Cannot ever remember using 6.

 

[Tom4value]

The comps you need is proportional to the complexity of the property and inversely proportional to the comps you can find.

 

[Mike Kennedy]

get out the tar and feathers: the "requirement" for Residential s/be:

2 current year directly competitive closed comparables, 2 of the same from the prior year, 2 of the same from 2 years earlier plus 2 active/contracted listings - firmly support opinions on current market value plus clearly illustrate LOCAL market trends for the most competitive LOCAL property sales.