Neighborhood Boundaires for Rural Properties

[Mike Kennedy]

"Rural Properties
Rural properties often have large lot sizes, and rural locations can be relatively undeveloped.
Therefore, there may be a shortage (or absence) of recent truly comparable sales in the immediate vicinity of a subject property that is in a rural location. Comparable sales located a considerable distance from the subject property can be used if they represent the best indicator of value for the subject property. In such cases, the appraiser must use his or her knowledge of the area and apply good judgment in selecting comparable sales that are the best indicators of value. The appraisal must include an explanation of why the particular comparables were selected."
Printed copies may not be the most current version. For the most current version, go to the online version at
https://www.fanniemae.com/singlefamily/originating-underwriting.598

FANNIE May 2014 Updated tutorial- RURAL PROPERTIES
Appraising Rural Properties -- Updated TutorialFinancing home purchases in rural and/or small town areas can challenge mortgage lenders and residential appraisers to determine an opinion of market value in accordance with Fannie Mae's guidelines. Yet even homes with some outbuildings on the property, or no recent nearby comparable sales, may qualify for Fannie Mae financing. The recently updated recorded tutorial "Appraising Rural Properties" provides detailed information and examples of common scenarios.

Interested Parties must log into the Guestbook:

[url]http://fanniemae.articulate-online.c...=/p/7778727304[/URL]

__________________



http://appraisersforum.com/showthread.php?t=201244

 

[Amy Perkins]

When I define an ocean-front property, the market area layer includes properties along the coast and neighborhood is no longer a value measure and data from the "neighborhood" should not be in the 1004MC because it does not relate to the subject property. If I am in a rural area, I tend to expand the neighorhood over 1 mile, because the market area is larger and spread out. I am not physically expanding the neighborhood and I usually explain why the data is not taken from the "neighborhood" in the report. I always have to do this, so many times I will create a second 1004MC to show the neighborhood and when it goes from 800K-8 million, they understand why I am doing what I am doing.

 

[Amy Perkins]

What is in a neighborhood anyway? Generally accepted boundaries by whom? The plat map "Garden Estates" or the MLS district of "Montecito?" Neighborhoods and planning are have no consistent rules. Maybe you think a "foothill" property along a mountain chain is a neighborhood, or properties surrounding a lake. We know there are patterns of value, but it 's not all so cut and dry. Zoning could be your defining neighborhood, such as an R2 area. It's not all a 1 mile radius tract home. What if you had a large custom view property along the foothills, but it was not typical like the other small tract homes. You might have three or four of these types in each little neighborhood. Say it's even got a bit a of rural feel as it gets closer to the mountains, but it's still in the same district as the tract homes. Doing a map search at the same elevation in a long strip might bring better comparable sales results because it is more rural at that elevation. Is that a neighborhood? When Fannie comes out with neighborhood labels we will all rest easier at night.

 

[Michigan CG]

So it would be acceptable to have a few comparables outside those set neighborhood boundaries on page 1?

Absolutely, I do it all the time.

 

[Vermonter]

On page 1 of the URAR I described my neighborhood boundaries in a East of, West of, North of and South of manor. The appraisal in question is a rural property on 4.98 acres. I had to go 18 +/- miles for comps. What are your opinions of all your comparables having to be within your set neighborhood boundaries? Is it acceptable to use comparables outside your set neighborhood boundaries is there are not enough comparables within? I hope this makes sense

There is no rule that comparable sales have to be within the defined neighborhood, so yes it is acceptable. I do it on almost every appraisal in my area. A solid explanation of why the search area was extended is put in the addendum.

Nobody has ever questioned it.

 

[Sid Holderly]

I do like Terrel, but a few AMC's require all of the comps to be within the neighborhood described. My cometary fits the restrictions placed on me. In rural areas one might call the similar characteristic neighborhood a region (rural, cropland, no large cities). For a rural property with more than an acre the towns and cities within likely do not provide viable comps. I have compared neighboring neighborhoods by publicly available school system scores or ratings. In rural areas there are many sections without houses. It is not unusual for comparable properties to be 20 miles apart. They may be the same distance on either side of a center of employment.