Using A 20 Mile Radius As The Neighborhood

[JR1972]

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?

 

[Meandering]

Bank needs to cite the imaginary regulation they want you to follow.

 

[Terrel L. Shields]

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]

Comps are where you find them. Where would a buyer of these homes search for them? That's where you should search.

 

[TRESinc]

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]

Bank needs to cite the imaginary regulation they want you to follow.

Agreed. I would also refer the OP to Fannie Mae guidelines for Rural properties. Not uncommon in some areas to go much more than 20 miles.

http://www.myappraisalinstitute.org/ano/DisplayArticle/Default.aspx?volume=15&numbr=7/8&id=21574

 

[J Grant]

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]

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.

 

[BRCJR]

Sad thing is, many Appraisers do not know the difference in neighborhood and competing market area and expand their "neighborhood" to accommodate comp selection.

 

[JR1972]

And then they tell you your market conditions report should also be your neighborhood....