Lack of comps

[Lobo Fan]

I have been seeing a shortage of comparable sales in many markets I cover. Being required to use 90-180 days comps may not always be an accurate reflection of the market. If no homes in a certain price range have sold within the last 6 months, dos that make the value of a property that of the properties that did sell? Is it a real drop in the market or just a lack of data, justfying the use of older or more distant comps.

Have you ever compe up with a value that just looks wromg even though your report is tightly completed?

 

[Tom Woolford]

If no homes in a certain price range have sold within the last 6 months, dos that make the value of a property that of the properties that did sell?

I guess my first question is why are you selecting comps on the basis of price? Thats just a plain wrong way of doing things. YOu should be selecting comps based upon age, GLA, major features etc. If the $$ are not there so be it. Thats the market. BUt why are you shooting at numbers anyway?

 

[Deleted member 77547]

It is probably lack of data. When I come across situations like this I simply appraise it using proper appraisal techniques and don't worry about the 90 day sale requirement. I explain the hell out of it which usually doesn't matter, they'll still come back and want 90 day sales - whether they are comparable nor not. I only use sales that best reflect the subject.

Example: I did an appraisal in a smaller suburb that had 7 sales in the past six months. This is a nice suburb with a mix of housing stock. I explained ad naseum with graphs and charts, etc. that this town has few sales and there were only 7 in the past six months making it necessary to use older sales and to go to a nearby competing suburb..blah blah blah. They came back TWICE asking for three additional sales that had closed in the past six months, 2 should be in the past 90 days and all should be within a mile. So there ya go. They don't read the report...they check the grid, see that this square peg doesn't fit and toss it aside. So I wonder why I spent so much time graphing and charting when they didn't even read it. I implored them to actually read the comments but it didn't matter. Deal dumped due to lack of data.

 

[Lobo Fan]

I think I phrased the question poorly. What I am getting at is that strict adherence to guidelines may nor be producing the most accurate results. At what point do you toss the guidelines and start using the best comparables?

 

[Deleted member 77547]

I think I phrased the question poorly. What I am getting at is that strict adherence to guidelines may nor be producing the most accurate results. At what point do you toss the guidelines and start using the best comparables?

Every time.

 

[Terrel L. Shields]

Have you ever compe up with a value that just looks wromg even though your report is tightly completed?

If you attempt to follow fannie mae "guidelines" then you have ceased appraising and are creating a government compliance document which pounds square pegs into round holes.

You, I, everyone has many fewer sales that are arms' length to choose from. Any request that demands 90 day comps is rejected out of hand. I simply will not chase phantom rabbits.

At what point do you toss the guidelines and start using the best comparables?

Every time.

correct answer. but the grief it will cause.

 

[The Warrior Monk]

I think I phrased the question poorly. What I am getting at is that strict adherence to guidelines may nor be producing the most accurate results. At what point do you toss the guidelines and start using the best comparables?

Guidelines that pertain to the valuation portion of an appraisal are simply that...guidelines. When it comes to valuing a property, they are of no concern. The property must be valued using the most relevant market data in order to come to a credible value conclusion. When the valuation is complete, the guidelines (concerns) of the lender can be addressed.

 

[jay trotta]

well now, guidelines (gobmint kind) note industry standard adjustments; this market has created the Question ?

What "Line Item Adjustments" are truly warranted ? And I will not give you a hint as to why this question has bean brought to the table........ROFL

 

[Mike Boyd]

You have to ask yourself, "why there are no current (60-90 days)sales?" Use active listings and pending sales to develop date of sale adjustments and explain thoroughly.

When they ask for more recent sales and you have already explained why you did not use more recent sales, either ignore the request or write an email back informing them that you explained in the original report and will not respond to their request unless they feel a new scope of work is provided by them. Notify them of the additional fee.

 

[Blue1]

I have been seeing a shortage of comparable sales in many markets I cover. Being required to use 90-180 days comps may not always be an accurate reflection of the market. If no homes in a certain price range have sold within the last 6 months, dos that make the value of a property that of the properties that did sell? Is it a real drop in the market or just a lack of data, justfying the use of older or more distant comps.

Have you ever compe up with a value that just looks wromg even though your report is tightly completed?

Define your neighborhood, do a 12-month survey of comparable sales. Arrange the sale dates in quarters of a year. Compare the quarters and you'll likely be able to identify a price trend.

If, for instance, the trend in sale prices has been declining year to date, you should be able to apply a % adjustment to dated sales at a rate supported by your 12-month analysis.

You could also compare a 12-month statistical analysis of your subject neighborhood with other competing areas and derive a locational factor. That is..If there is a fairly similar area with more contemporary close dates you might be able to apply a locational factor using a matched pair analysis.

You could then include your dated comps (with market condition adjsutments) from the immediate area then include more recent sales from competing areas using a locational factor adjustment (along with market conditions adjustment).

If you go outside your defined neighborhood boundaries you better explain in detail....