Subject as a Comp

[Bobby Bucks]

Why is that? first one makes sense, second one does not.

Henry Harrison addressed using the subject as a comparable in one of his books, that's good enough for me.

 

[J Grant]

Additional reason for not using the subject as a comp is it creates a price anchor bias. A few here have mentioned was the prior sale of subject at "market value "...how the heck do we know? We'd have to perform a second, retrospective appraisal to when subject sold X months ago, was the price market value ? What if it sold over or under what we think the MV is? Regardless, it sets up a price anchor bias for our value opinion of the the subject today.

 

[Vermonter]

Additional reason for not using the subject as a comp is it creates a price anchor bias.

Agree with this altho if you think about it, all comparable sales create a price anchor...that's the entire purpose of the SCA

 

[J Grant]

Agree with this altho if you think about it, all comparable sales create a price anchor...that's the entire purpose of the SCA

Perhaps -the comps sale prices create an anchor bias, then the appraiser is supposed to analyze them and apply adjustments to remove bias for an adjusted range of prices in a range of "market value"

The problem with using a subject as a comp is it creates an anchor price bias for the very same property we are appraising. It can change the appraisal question into is the subject worth as much as it sold for last time , instead of a clean slate what is the subject worth in my market value opinion today.

We have to analyze and comment on the subject's prior sale price anyway, but keeping it off the grid has less chance of it becoming a benchmark anchor bias problem.

 

[alebrewer]

A few here have mentioned was the prior sale of subject at "market value "...how the heck do we know?

To be consistent, you'd have to apply that same logic to the comparables, no? In which case, you'd never complete an assignment. If the subject was exposed to the market, the buyer and seller don't appear to be related, the price appears to not be influenced by atypical motivation/terms, why would you assume anything OTHER than that it was arm's length/market value?

 

[ramrcdk]

Does anyone know what USPAP says for using the subject as a comp?

The underwriter wants it removed; however, I think it is necessary to produce credible results.

Subject sold 3 months ago in cash to mom, and now, it is being sold to her son.

I think it reasonable to have it in the report with appreciation applied, especially since 2 of the other closest comps bracket the adjusted value nicely.

Comp 1 after adjustments 389k
Comp 2 after appreciation $392k (subject)
Comp 3 after adjustments $394k.

Thoughts?

AS was said: My first thought: Non-Arm's Length? Use: only IF absolutely necessary (4-5-6)
AND likely not even. Why not shed-light with extra comments regarding the : Subject History.

 

[Illuminati]

Non-Arm's Length?

Appraisal we are doing is non-arm's length since it is a sale between mom and son.

The subject as a comp was arm's length--selling agent verified.

 

[glenn walker]

I agree with eh Underwriter on this one

 

[J Grant]

To be consistent, you'd have to apply that same logic to the comparables, no? In which case, you'd never complete an assignment. If the subject was exposed to the market, the buyer and seller don't appear to be related, the price appears to not be influenced by atypical motivation/terms, why would you assume anything OTHER than that it was arm's length/market value?

That is nonsense.

We are not appraising the comps. So the logic does not apply.

We do NOT assume market value !!!! We are obligated to create an appraisal whenever we opine X$ as a market value, or Xprice as a MV benchmark. Look it up _USPAP - an opinion of MV is an appraisal. An opinion can be a benchmark tooo (prior price ) To support the prior price as MV we'd need to do a retrospective appraisal for that.

That was my point - a prior sale of a subject would need be treated like any other sale, no MV assumed for its price, it gets put on the grid and adjusted. But by your own admission above, the problem is as I described - an appraiser makes assumption prior sale price of subject was MV and thus an anchor price affecting results .

 

[alebrewer]

We do NOT assume market value !!!!

For the sales you use in your grid, do you assume those sold at MV/arm's length or no? How can you arrive at an MV for the subject, if none of the comparables sold at MV?