Question on a UW request for 2 comparables out of the neighborhood for new construction.

[J Grant]

I think its stupid to pass over good new construction comps in the subject's neighborhood, but outside of the subject's PUD/subdivision. Giving this "comp" outisde of the subject's neighborhood weight would in many cases be used for rubber stamping. It just as random as having a requirement to use a comp in a different city or a different state. The point should be to have a comp or 2 outside of the builder's control but within the same neighborhood if possible.

Nobody said to pass over good constitution comps in the subject neighborhood or PUD.

we are talking about adding comps in ADDITION to those when needed.

 

[shrubberyvaluation]

Nobody said to pass over good constitution comps in the subject neighborhood or PUD.

we are talking about adding comps in ADDITION to those when needed.

Right but what is the point of going outside of the subject neighborhood? What if I have a resale in the same subdivision, a sale from a different builder in the same subdivision, and a sale outside of the subdivision but within the neighborhood. What is a sale outside of the neighborhood getting? It is like asking for a new construction comp in Queens or the Bronx for a new construction in Manhattan, just because. Its not even a Fannie or Freddie requirement so thats not an excuse, they just want outside of the subdivision.

 

[ZZGAMAZZ]

Because the definition of MV is the open market ( not just restricted to X community) and most buyers look in several or more similar communities instead of just one ( though there are cases where a buyer wants the one and only X community) - houses compete against other houses , in X Y and Z communities. In resales it is less of an issue but new construction is priced differently and builder premiums might not always transfer to resale house was put on open market prices.

Gotta admit, your perspective sure seems to reflect a functional definition of "competing" property--yet it does not seem probable that 1 or 2 or even 3 comps from a different development could do anything more than "suggest the possibility" that the entire subject's development is overpriced; consequently that requirement appears to reflect lip service give to an industry standard, which is virtually meaningless as others have said. Imagine if you will an appraisal with 5 or 6 or 7 comps from the subject development that adjust into a narow range of values compared to 1 or 2 out-of-developed, which adjust to a significantly lower value--with those prioritized in the Opinion of Value. Rather than to even think about that, the savvy appraiser merely uplies upwards "location" line item adjustments to bring those 2 adjusted values up into the range of the in-development comps [alhough good luck being able to demonstrate the inferiority by any meaningful method. CONSEQUENTLY, the standard that has good intentions has literally no meaningful value IMO.