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Review --- Placement of Listings

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Papa Charlie

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In my review of an appraiser's reports he/she often uses listings as one of the first three comparables. Is there something somewhere that says the first three comps need to be closed sales? If so were do I find it?
 

RSW

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Listings can be used as a supportive comp but not as a primary 1, 2, 3 per Fannie Mae guidelines.
 

Papa Charlie

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Do you have a link to the Fannie Mae Guideline that applies?
I remembered reading it but can't find it.
 

CANative

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Retired Appraiser
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California
See the USPAP, Fannie Mae forum. Under that there is a link to the Fannie Selling Guide. It might take a few minutes to find the exact reference you're after but it's well worth it because you will find other topics you might need later.
 

Papa Charlie

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I reviewed the guide and found only the requirement that three closed sales be provided. I didn't see anything about the first three having to be sales. It seems like I read it at one time but just can't find it.

But thanks for the help. If you do see the specific reference please let me know.
 

Mike Kennedy

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Certified Residential Appraiser
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New York
There isn't any requirement regarding the sequence. Similarity and Location often indicates Actives &/or Contracted Sales are the most similar, most proximate, and most current value indicators. Mandatory 3 CLOSED sales is a requirement.


XI, 406.02: Selection of Comparable Sales (06/30/02)
We require an appraiser to research, analyze, and consider influences that may affect value based on market evidence (such as closed sales, contract sales, and properties for sale in the market area; market studies; etc.). For example, if a property is located in a neighborhood that includes (or is close to) an airport or hazardous waste site or that has relatively high property taxes or vacant or boarded-up properties, we expect the appraiser to research, analyze and use comparable sales from the same neighborhood or affected area (whenever possible) in his or her analysis. This will ensure that any effect of these value-influencing characteristics is taken into consideration in the development of the opinion of value for the property.

If a property is located in an area in which there is a shortage of truly comparable sales—either because of the nature of the property improvements or the relatively low number of sales transactions in the neighborhood—the appraiser might need to use as comparable sales properties that are not truly comparable to the subject property or properties that are located in competing neighborhoods.

In some situations, sales of properties that are not truly comparable or sales of properties that are located in competing neighborhoods may simply be the best comparables available and the most appropriate for the appraiser’s analysis. The use of such comparables is acceptable as long as the appraiser adequately documents his or her analysis and explains why these comparable sales were used (including a discussion of how a competing neighborhood is comparable to the subject neighborhood).

The appraiser must report a minimum of three comparable sales as part of the sales comparison approach to value. The appraiser may submit more than three comparable sales to support his or her opinion of market value, as long as at least three are actual settled or closed sales. Generally, the appraiser should use comparable sales that have been settled or closed within the last 12 months. However, the appraiser may use older comparable sales if he or she believes that it is appropriate, and selects comparable sales that are the best indicators of value for the subject property. The appraiser must comment on the reasons for using any comparable sales that are more than six months old. For example, if the subject property is located in a rural area that has minimal sales activity, the appraiser may not be able to locate three truly comparable sales that sold in the last 12 months. In this case, the appraiser may use older comparable sales as long as he or she explains why they are being used.
 
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David Dietz

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State
Florida
XI, 406.02: Selection of Comparable Sales (06/30/02)

Read paragraph four, your answer lies within. Listings can be used as support after the initial use of three closed sales.
 

Papa Charlie

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State
Oregon
Thanks Mike
I haven't seen any requirement about the sequence either but have been working under the assumption of 3 closed "up front" for many years. This one guy/gal I've been reviewing draws my attention by doing it. It certainly isn't common practice but unless I see a guideline to the contrary, what the hey.
 

David Dietz

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Oct 30, 2006
Professional Status
Certified Residential Appraiser
State
Florida
The appraiser may use the subject property as a fourth comparable sale or as supporting data if the property previously was sold (and closed or settled). If the appraiser believes that it is appropriate, he or she also may use contract offerings and current listings as supporting data. However, in no instance may the appraiser create comparable sales by combining vacant land sales with the contract purchase price of a home (although this type of information may be included as additional supporting documentation).


This to me sounds like in addition to and would be after the required minimum three closed sales. I would not consider the use of actives within the the first three comparables as falling within this guideline, but I guess the real question is did the appraiser supply three sales.
 

Papa Charlie

Thread Starter
Freshman Member
Joined
Jul 9, 2008
Professional Status
Certified Residential Appraiser
State
Oregon
The appraiser always includes at least three sales in total as required. It just looks odd and it's completely foreign to me to see listings in the first three spots.
 
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