How many comps do you use?

[juck224]

I’ve seen this question get posed some times over the years, but was wondering how many comps you residential appraises are typically using in your market, and what market that is. I live in a unique area where I have urban, suburban, and rural coverage areas. When I started some years ago my mentor was notorious for using tons of comps, like 6-7 sales then 2-3 actives/pendings. When I joined my current firm they encouraged me to cut back on using unnecessary comps when they don’t strengthen the credibility and aren’t an assignment condition (e.g 2 actives). Over the years I’ve widdled down my comps and have found myself often using 3-4 sales only on conventional, particularly in easier markets or rural markets with few comps where I can only find about three good ones. I often feel guilty when I send out a 3 comp report despite it being completely credible and bracketing features etc. there’s still some that end up with perhaps 5-6 sales 1-3 listings, typically the more unique ones, but overall find myself using only 3-4 for conventional 95% of the time. I’d like to hear everyone else’s thoughts and experiences. It’s certainly saved me a lot of time and have had 0 pushback, and always focus on keeping it credible regardless

 

[J Grant]

It depends on the assignment and data/subject .

I like to typically use 4 closed sale comps and sometimes 5. A high value or complex property might need 6 comps.

Imo, 3 comps feels skimpy but if that suffices, so be it. I typically do not include a listing unless it is required by a client or if a listing or pending enhances the appraisal in a relevant way.

 

[Surf Cat]

It's not really the number of comparables as a hard and fast rule, it's making sure that all areas from the GLA in market Grid to financing cover the components of bracketing and/or equality and similarity.

For example;

1) Subject's Site and GLA must be bracketed.
2) Subject's Bedroom count must have some equality with a few of your comps. (You can't have all 3 bedroom comps for a 4 bedroom subject).
3) Subject's Bath count must have some equality with a few of your comps. Though here, an explanation “may’ suffice.
4) Subject's Location, condition, views must have some similarity.
5) Amenities (swimming pools, tennis courts, equestrian facilities) must have at least 1 or more comps of equal or similar attribute
6) Zoning: All comps should be equal in zoning. If you use 1 or 2 that arent equal, an explanation needs to be given.

If you can cover all this with 3 comps.... you're good. If your comps have a wide spread in the gross sales prices...another 1, 2 sales may be needed.

As JGrant stated above, High end, custom homes, Estates, need more sales due to being complex.

These are the old school ways though. Now, it's more about data collection, AI, and what a bunch of data being crunched says..... the independent art of it is going away.

 

[Zoe]

The subject market dictates it. I use way more than I put in the report. I slowly start narrowing them down to most competitive and similar to the subject.

 

[ZZGAMAZZ]

It's not really the number of comparables as a hard and fast rule, it's making sure that all areas from the GLA in market Grid to financing cover the components of bracketing and/or equality and similarity.

For example;

1) Subject's Site and GLA must be bracketed.
2) Subject's Bedroom count must have some equality with a few of your comps. (You can't have all 3 bedroom comps for a 4 bedroom subject).
3) Subject's Bath count must have some equality with a few of your comps. Though here, an explanation “may’ suffice.
4) Subject's Location, condition, views must have some similarity.
5) Amenities (swimming pools, tennis courts, equestrian facilities) must have at least 1 or more comps of equal or similar attribute
6) Zoning: All comps should be equal in zoning. If you use 1 or 2 that arent equal, an explanation needs to be given.

If you can cover all this with 3 comps.... you're good. If your comps have a wide spread in the gross sales prices...another 1, 2 sales may be needed.

As JGrant stated above, High end, custom homes, Estates, need more sales due to being complex.

These are the old school ways though. Now, it's more about data collection, AI, and what a bunch of data being crunched says..... the independent art of it is going away.

Very nice summary IMO that is appreciated....although like the OP and JG I feel as though I'm shorting the client by using only 3 comps...as though there is more of a certainty--even quantifiable--in reporting 5 - 7 sold comps and with about 2 pending sales to reflect the current market.

 

[juck224]

Very nice summary IMO that is appreciated....although like the OP and JG I feel as though I'm shorting the client by using only 3 comps...as though there is more of a certainty--even quantifiable--in reporting 5 - 7 sold comps and with about 2 pending sales to reflect the current market.

I agree with this, it feels like shorting the client, yet I've also had a reviewer directly tell me he doesn't like too many comps because it's more work for them.... My philosophy as of late has been to focus first on picking out the three absolute best and most relevant sales first, if they result in complete bracketing of all features, low adjustments, and a tight range of adjusted sale prices I'm good. Otherwise I expand for however many more I need. I also work for a company and get a fee split, so I am doing 10-11 resi reports a week and although each report is credible and well thought out, I have just cut out any excess that doesn't add anything to the credibility of the report. Just my thoughts on it, glad to hear everyone elses as well.

 

[ZZGAMAZZ]

I agree with this, it feels like shorting the client, yet I've also had a reviewer directly tell me he doesn't like too many comps because it's more work for them.... My philosophy as of late has been to focus first on picking out the three absolute best and most relevant sales first, if they result in complete bracketing of all features, low adjustments, and a tight range of adjusted sale prices I'm good. Otherwise I expand for however many more I need. I also work for a company and get a fee split, so I am doing 10-11 resi reports a week and although each report is credible and well thought out, I have just cut out any excess that doesn't add anything to the credibility of the report. Just my thoughts on it, glad to hear everyone elses as well.

I couldnt do 10 a week even if I was 50 years younger. Even by relying mucho on Spark to populate my forms, I need absolute min of 4 hours just to complete a report... although inly 30 - 45 minutes to reconcile...

 

[juck224]

I couldnt do 10 a week even if I was 50 years younger. Even by relying mucho on Spark to populate my forms, I need absolute min of 4 hours just to complete a report... although inly 30 - 45 minutes to reconcile...

Yep I work 7 days a week 8+ hours everyday often up to 12 hours. I am probably the youngest appraiser you'll ever meet so I can handle it for now...

 

[TC]

Yep I work 7 days a week 8+ hours everyday often up to 12 hours. I am probably the youngest appraiser you'll ever meet so I can handle it for now...

45?

 

[juck224]

45?

Haha, I wasn't alive during 9/11, I'll say that