Sells Of Comparable Homes

[Keith Sutyak]

Could someone please tell me the criteria used in considering properties as comparable? (i.e., radius considered, # bedrooms, Sq footage, etc.) Thank you.

You people are great! Thank you for the input.

With a family of four children, I need more space. I am planning an addition on my house. It is currently 1500 SF 3 BR, 2 Bath Ranch. It sits in a moderate middle class subdivision of Virginia Beach. Areas within the 2 mile radius are home mixed between low middle class to high middle class. To match the architecture of homes in my neighborhood, I need to add a second floor, making the house 3100 sq ft with 6 BR and 4 Baths and a den. I have spent the last year researching and engineering the design, which is far superior in strength to even the best built homes in the area. It will cost me $110K and I need the appraisal to come in at about $270-280K.
Areas in my immediate neighborhood are typically two story, 2400 sq ft four BR homes that sell for around $210K. New homes (2100 sq ft, 3 BR, on small lots) up the street (1 mile) are selling for $292K; (4 BR homes are over $300K)
The only homes that are reasonably comparable in age, size and function are four to five bedrom homes in the immediate vicinity (1-2 miles); they are selling for $340K. The market in Virginia Beach is like a stream filled with piranha. Homes typically get four to six bids (not offers) the first day. I cannot find a six BR home in the marketplace, but I am sure it would sell for well over $300K.
Is it reasonable to do the addition.

 

[Bill_FL]

Keith,

Are you an appraiser? This probably will get moved to the "ask an appraiser" section.

First, all of the above that you mentioned are considerations in selecting comparable sales. By radius, I would assume that you are referring to the proximity of the comparable sales to the subject.

Since you ask us this question, and none of us know the subject-presumable your home- or its location, radius may not be as important as actual location. For instance, if you are located in a subdivision of similar homes, it may be best to use homes in your subdivision that are technically further from you, than to use a home that your property backs up to in a different subdivision.

Please remember too, that if you are looking at sales, not all sales are comparable sales. To be considered comparable, the sale must be similar enough in location, physical similarities and economic similarites to allow for a reasonable comparison.

Perhaps, if you could give us a little more detailed question, we could give you a more detailed answer.

 

[Pamela Crowley (Florida)]

There are whole books written on this subject.

Then there are USPAP compliance issues.

Then there are supplemental guidelines issues.

What are you using in your Appraiser's Certification regarding the comparable selection?

 

[Otis Key]

Originally posted by Keith Sutyak@Nov 8 2004, 03:44 PM
Could someone please tell me the criteria used in considering properties as comparable? (i.e., radius considered, # bedrooms, Sq footage, etc.) Thank you.

Keith, as Bill pointed out, those are just some of the factors considered. There can, and usually are, be many more variables and considerations, depending on your location, property, etc.

Pam also gave you the correct answer in that there are more books written about appraising and how to and "what for", etc., than even most of us want to consider.

If you could clarify your location, status, reason, etc., as to the question, then you might get better answers that might be of help.

 

[Andy Grimaud]

Keith,

The short awnser to your question is, Matched Pair Analysis.
In areas where tract homes are prevelant and sales are plentiful I seek comps that a typical buyer might consider as interchangable.

Then proximity to subject, Gross living area, sale date, condition, lot size, external influences. Just to name a few.

Andy

 

[Abester]

In order for sales to be comparable sales, they would be competitive with the subject property if all were on the market at the same time.

 

[Lee Lansford]

Keith...you may as well inform the appraisers here exactly it is that prompts you to ask your question. You'll find that you will obtain more specific advice versus the theory of what constitutes a "comp".

 

[J in Florida]

The critirea for selecting comps are as follows:

If you are a commission based loan agent/officer/whatever:

1. The ones we need to make the deal work. Similarity and proximity are irrelevant. Whether it closed or not is irrelevant. Whether they exist or not is irrelevant.

2. See number 1.

3. See number 2, then number 1.


:dance: :dance: :dance:


If you really want to know:

(copied directly from Fannie Mae selling/servicing guide).....use
comparable sales that are locationally and physically the most similar to
the subject property.....


Assuming the sales are arms length transactions with no undue pressure on either the buyer or the seller, and that non-realty items (such as furniture, car, boat vegas trip) were not included in the sale, and the terms of the sale fit the definition of market value as stated in the report, it is best to stick to the 2 basic concepts:

Locationally and physically most similar to the subject.

For instance, 1 block away is more similar than 3/4 mile away, even though 3/4 mile "fits guidelines". 1500 SF is more similar to 1500 SF than 1900 SF. 5 years old is more similar to 5 years old than brand new, and so on, and so on, and so on.

Also, the term "comparable sale" indicates that the property is physically and locationally similar to the subject and that the transaction closed and was recorded. What it appraised for, what the neighbor said it "went for", want a realtor says "she can sell it for " do not constitute a "comp".

 

[Keith Sutyak]

To all,
Please see my editted question. Thanks to all.

 

[Bill_FL]

To match the architecture of homes in my neighborhood, I need to add a second floor, making the house 3100 sq ft with 6 BR and 4 Baths and a den.

Areas in my immediate neighborhood are typically two story, 2400 sq ft four BR homes that sell for around $210K.

Ok, to see if I have this straight-in order to be asthetically pleasing, you have to build the house to 3100sf and have 6 beds and four baths. The typical home in your neighborhood is 2400sf and 4 bedrooms?

If I read into that correctly, there are certain assumptions we must make. First, you say typical, but are thre other home that large in the value range you think your will be in - in your immediate neighborhood? If not, would it be considered an over-improvement? Meaning, will you spend more on the improvements than the value will go up.

Look at it another way, for how much can you go buy a home (that all ready exists or have it built) that is the size you need, in an area of similar homes?