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Using a property as a comp that was a refinance

James Mpls

Junior Member
Joined
Apr 4, 2010
Professional Status
Certified Residential Appraiser
State
Minnesota
Has anyone ever used a property that they appraised for a refinance as a comparable? I thought I heard something about this some time ago but have never done it. I'm working on a report and the property next door I appraised in April and it would be my best comp, same outdoor amenities (pool, attached grill, extra covered patio, extended deck off main house, outdoor fireplace), same external influences (extra long backyard that backs to a creek, no neighbors behind it), smaller GLA and site size but they fit within my parameters. There is nothing in the neighborhood that would fit better or in surrounding neighborhoods and every other comp in the neighborhood is much smaller than what I would like to use. Any advise would be appreciated.
No.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Because the house next door sold in June 2018, I decided to put that sale in and make a time adjustment and then used the subject properties sale from January 2019 to help with bracketing major components, with a market adjustment.
A. I wouldn't. B. No, I would not use the subject sale either. C. Search harder. You might mention the sales as supporting evidence but get your primary comps from the current market.
There is a pre-covid market. There is a post-covid market, even when the prices are indistinguishable. I'd try to use sales since March 1 as your best comps.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Thanks everyone for the information. I just thought I remember hearing it one time while sitting in a class years ago but may have taken it out of context. The house that I did next door fits within the GLA and I was looking for something that had similar amenities. Because the house next door sold in June 2018, I decided to put that sale in and make a time adjustment and then used the subject properties sale from January 2019 to help with bracketing major components, with a market adjustment. That particular subdivision does not seem to have a lot of sales in the upper sizes, or sales in general (1 pending listing for new construction outside the subdivision with expanded GLA and geographic parameters), not sure if this is a sign of Corona because the rest of the DFW does not look like that. Anyway, going outside the neighborhood didn't make sense, I already had properties that had a high net/gross adjustment, and going outside would just add even more. So big adjustments it was for smaller properties that may not make the best sense but better than outside of the subdivision. I'm sure I will be getting a revision with lots of questions, even though I tried explaining the reason for everything...lets just hope they read the report before they just do an automatic return with a list of issues that have already been addressed.
Why the aversion to going outside the subdivision? ARe there truly no similar subdivisions with large homes within a several mile or other reasonable distance?

IF my subject was a very big house, I would only use one substantially smaller house in appraisal if meaningful to show a sale in the subdivision and it would be comp 4 or 5. Because the typically motivated buyer for a very large house would not buy a small house and vice versa. Even if the sf is adjusted for, it is really not a good comp because the same buyer would typically not substitute one for the other. What other choices in the area does a buyer have who wants a big house ?
A time /market condition adjustment for the large house next door? sale from 2018 is ok, but I'd want to bracket using recent large house comp sales in whatever competing subdivision or area exists.

(PS re reading your more recent post was confusing, did your prior appraised house as a subject SELL in 2019? And you are asking if you can use that sale of it as a comp in new report ? Or it did not sell within past few years and yor prior appraisal was for a refinance of it.
 
Last edited:

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
"A minimum of three closed comparables must be reported in the sales comparison approach. Additional comparable sales may be reported to support the opinion of market value provided by the appraiser. The subject property can be used as a fourth comparable sale or as supporting data if it was previously closed. Contract offerings and current listings can be used as supporting data, if appropriate."

 

ZZGAMAZZ

Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Thanks everyone for the information. I just thought I remember hearing it one time while sitting in a class years ago but may have taken it out of context. The house that I did next door fits within the GLA and I was looking for something that had similar amenities. Because the house next door sold in June 2018, I decided to put that sale in and make a time adjustment and then used the subject properties sale from January 2019 to help with bracketing major components, with a market adjustment. That particular subdivision does not seem to have a lot of sales in the upper sizes, or sales in general (1 pending listing for new construction outside the subdivision with expanded GLA and geographic parameters), not sure if this is a sign of Corona because the rest of the DFW does not look like that. Anyway, going outside the neighborhood didn't make sense, I already had properties that had a high net/gross adjustment, and going outside would just add even more. So big adjustments it was for smaller properties that may not make the best sense but better than outside of the subdivision. I'm sure I will be getting a revision with lots of questions, even though I tried explaining the reason for everything...lets just hope they read the report before they just do an automatic return with a list of issues that have already been addressed.
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Should be able to use but definitely can not do so, although the database of potential comps would be increased exponentially if the subject of non-sale properties could be used to populate a different kind of universal database, which would be based upon an underlying assumption that appraisals are accurate, and with the corresponding, underlying implication that the appraisal reports would be held to a higher standard. Unfortunately, the definition of "market value" as well as all appraisal forms would need to be revised
 

sputnam

Senior Member
Joined
Apr 24, 2012
Professional Status
Certified General Appraiser
State
North Carolina
Absolutely not. A refi isn't a sale. It's not a comp. Presuming that it's recent enough and you developed the refi appraisal properly... you can certainly reuse the data you gathered for it. Might be a good idea to reread the definition of market value.
 
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