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Using A 20 Mile Radius As The Neighborhood

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JR1972

Freshman Member
Joined
Oct 31, 2014
Professional Status
Certified Residential Appraiser
State
Wisconsin
Working on a sale in a very rural area of Wisconsin. The subject consists of two reports: One is for a manufactured home on one acre and the other is a bermed/earth home on 41 acres. Very few comps for both properties as manufactured and earth homes are rare in the area. I have used a 20 mile radius from the subject as my neighborhood. Bank is telling me that I can't do that and that I have to use a Township or partial area of the County as my designated neighborhood. Any thoughts?
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
It is not their decision, BUT neighborhood is different from "market area". Neighborhood to me would never exceed the school district or other regional boundary. Market area could and would in a rural situation be a much larger area. For rural unique properties, 50 miles may be necessary to find "comps". Comps do not have to be from the "neighborhood". Any differences in the market from the comps found more distantly might necessarily be adjusted, but you have to go where you have to go to find comps. So I might acquiesce and change my "neighborhood" to a smaller area, but my "market area" would be determined by where the market is.
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Comps are where you find them. Where would a buyer of these homes search for them? That's where you should search.
 

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
It is not their decision, BUT neighborhood is different from "market area". Neighborhood to me would never exceed the school district or other regional boundary. Market area could and would in a rural situation be a much larger area. For rural unique properties, 50 miles may be necessary to find "comps". Comps do not have to be from the "neighborhood". Any differences in the market from the comps found more distantly might necessarily be adjusted, but you have to go where you have to go to find comps. So I might acquiesce and change my "neighborhood" to a smaller area, but my "market area" would be determined by where the market is.

i agree.

just reviewed one yesterday in a suburban setting where the neighborhood boundaries on 3 sides were good but the 4th had been extended almost 4 miles to encompass one comp used in the report. spoke with the appraiser and they were confusing market and neighborhood and actually told me they expanded the neighborhood so they would not have to explain why the one comp was so far from the subject.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Banks don't tell appraisers where appraiser "should" search. Explain to your client why the expanded search, if they insist on dictating area it is an unacceptable assignment condition
 

JR1972

Freshman Member
Joined
Oct 31, 2014
Professional Status
Certified Residential Appraiser
State
Wisconsin
I will state here that I did not increase the size of my neighborhood to include the comps, I set my neighborhood before looking for comps. Just trying to figure out if they can tell me what I should be using as a neighborhood (which I highly doubt) or if there were any rules against using a designation like this as a neighborhood.
 
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