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True Comparable?

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JULIEWEBB

Thread Starter
Sophomore Member
Joined
Sep 23, 2004
Professional Status
Certified Residential Appraiser
State
Wyoming
Selling agent wants me to use a house across the street from Subject as a Comparable Sale. The Subject is new construction. The house across the street was not put on MLS. According to the selling agent, the house was sold before she could get it on MLS. She said it was not a custom home, but the buyer's were driving through the neighborhood and put an offer on the house before it was completed. I am hesitant to use it because of it's lack of exposure to the open market. The LO wants a current sale in the Subject's immediate neighborhood. And this is the only one that I can find. Wyoming is a non-disclosure state. But I called the court house and it has transferred ownership on the date that the seller said it closed. This sale would be Sale No. 7 in my market grid. I need to know if you would consider this secondary data that I could use, without putting any weight on it. Thanks for your help.
 

Tudor

Member
Joined
Aug 15, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
I would put it in the report, weigh it how ever you see fit. If you don't use it, someone will ask why.
 

Bill Larkin

Sophomore Member
Joined
Jan 20, 2004
Professional Status
Certified Residential Appraiser
State
Massachusetts
seems like a decent comparable to me. Just disclose to the lender what you just disclosed to us, No MLS listing / No market exposure. Remember though YOU are the appraiser, don't use the other property just because the selling agent would like you to.
 

Sid Pachter

Sophomore Member
Joined
Feb 26, 2008
Professional Status
Banking/Mortgage Industry
State
Florida
You should interview the new owner of the home to verifiy the circumstances of the transaction, if the seller paid an closing costs that may have been rolled into the sales price, did the buyer pay for any options under the table, etc. Make sure you disclose that you interviewed the new owner in the appraisal report. Also contact the builder and ask if they discounted the sales price. Based upon what you have disclosed above, the transaction appears viable.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Use it or disclose why you didn't, but it should be addressed. I am not fond of using PR sales where I can't get details of the transaction, but in this case it looks like you can. I see no reason not to use it. Weight it as you see fit.
 

Atlanta CG

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Absolutely have to talk to the new owner. They may have been looking at homes for months and know exactly what they want and what the other homes are selling for. Just because it was sold prior to the listing does not mean it has not been exposed to the market - at that price and with other very comparable homes on the market that have tested the market, this could be interpreted as similar to being exposed.
However, if it were just an impulse purchase by the buyers because the liked the outside look or for some other unsupported reason, then that is a different story. Just had a comp that sold for $201,000 sight unseen because of the internet photos, realized they were over their heads, put is on the market for $222,000 so they could recapture their costs, is now for sale at $159,000 as a short sale. If this were not verified, it would distort a report's final opinion of value.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Unless you can verify the terms of the sale with a source independent of the realtor involved in your transaction, I do not see how you can give it any weight whatsoever. See Fannie's guidelines regarding the issue:

XI, 406.01: Sources of Comparable Market Data (06/30/02)
The appraiser’s opinion of market value is no better than the reliability of the comparable data that is used; therefore, the appraiser must exercise due diligence to ensure the reliability of the comparable sales data that he or she uses. The appraiser must report his or her data and/or verification source(s) for each comparable sale on the appraisal report form. An appraiser may use a single source for the data and verifications or multiple sources if they are needed to adequately verify the comparable sales. The quality of the data available varies from source to source and from one locality to another. In view of this, a single data source may be adequate if the appraiser uses a source that provides quality sales data that is confirmed or verified by closed or settled transactions. On the other hand, if the appraiser’s basic data source does not confirm or verify the sales data, the appraiser will need to use additional sources. When comparable sales data is provided by a party that has a financial interest in either the sale or financing of the subject property, the appraiser must reverify the data with a party that does not have a financial interest in the subject transaction.

My reading of this guideline is that if you can't verifiy the comparable sale information with an independent source, then you should not use that comparable sale at all.
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Julie,

I think you should at least mention it and disclose the quality of your sources.

Since you have no info from your basic or public sources (MLS, recorder) then your dependence on parties to the comp's transaction become your primary source and each of them become your verification source for the other.

Being in a nondisclosure area, I am as leery as you about trusting those sources but if you get the same data from all parties (buyer, seller, both agents) and don't smell anything fishy, then it may be a viable comp.

Just make sure that those parties do not also have an interest in the subject transaction, or if they do, disclose that. And disclose/describe your sources and whether or not they are consistent.
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
A property does not have to be listed to be an arms-length transaction. In this case, since it was in an area where new houses were being built and offered for sale, the buyer sounds like they were typically motivated.

A non-MLS sale would require the appraiser to know the elements of the house, sq footage, quality, rooms, etc. The selling price is a matter of public record.

Given that comparables should be functionally, physically and locationally similar, it sounds to me like you might have a very good comparable sale if in fact it is physically and functionally similar. Locationally, you can't do a whole lot better than across the street. Talk about sharing the same location influences.
 

NC Appraising

Senior Member
Joined
Apr 28, 2006
Professional Status
Certified Residential Appraiser
State
North Carolina
Past studies have shown that +/- 20% of all homes sell without a real estate agent. Most FSBOs put a sign in their front yard, list their home in the local news paper, and on various websites.

If I find a really good FSBO comp, I now go to zillow to see if anyone has updated or added anything there. FSBOs are starting to include pics on zillow, and on other FSBO websites. The easiest way is just to enter the street address in google, and see if anything pops up. Usually there is a phone number so I call them and verify as much as possible. Also, look for past MLS listings to verify some things.

If you still do not feel comfortable about the sale; at least the FSBO comp will kinda give you an indication of what the subject is and isn't worth (high and low range), a starting point.
 
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