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When Is It Appropriate To Use The Subject Property Sale As A Comp?

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Doug in NC

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Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
I'm working on a lot appraisal refi and the subject property sold just last year. The lot adjacent is now under contract but doesn't close until the end of this month. I have one comparable lot sale just a block away that sold last month for $70K less than my subject! The third best sale that I have is a mile away with same zoning, but is not in a subdivision and is 3 times the size of my subject lot. The big range in values is causing me to consider if it might be a good idea to throw in the subject prior year sale, just to give some direction to this situation. Oh, and tax value was set in January 2016 at less than half of what the borrower paid for it. Crazy.
 

J Grant

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Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
sounds like perhaps the buyer over paid for the subject lot? Or the market declined...I am seeing a trend of some prices weaker than back in 2015 or 2016, in certain cases. Whether to use it as a comp or not can depend...may have to do a time /market condition adjustment on it...or is subject lot superior in location or other ways?

Whether you use it as a comp or not, I don't envy you having to explain a lower price /value difference...its awkward when that happens on a subject property but we did not advise buyer of sale price on a prior date...
 

Meandering

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Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
You can use the subject's sale as comp 4 or higher comp. But I would look for more lot sales, even if you did not grid them, but included a mini spreadsheet and comments in the addenda.
 

Elliott

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Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
I'd be okay using it as a 9th Comp.
 

Doug in NC

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
sounds like perhaps the buyer over paid for the subject lot? Or the market declined...I am seeing a trend of some prices weaker than back in 2015 or 2016, in certain cases. Whether to use it as a comp or not can depend...may have to do a time /market condition adjustment on it...or is subject lot superior in location or other ways?

Whether you use it as a comp or not, I don't envy you having to explain a lower price /value difference...its awkward when that happens on a subject property but we did not advise buyer of sale price on a prior date...
I kinda think the borrower probably did pay too much last year too. It's the 2017 sale about a block away that is really worrying me at $70k below subject's last year price. Waiting for the agent to return my call, just hope she is not on vacation this week (or is reluctant to call me back to explain why she sold two similar lots in the past year with a $30K+ difference in the $200K price range).
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
I'd be okay using it as a 9th Comp.

Might as well use it, because if the value comes in at or below the year old sale price, there are going to be issues. Address the previous sale, look hard at the market conditions for lots, and narrate, narrate, narrate.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I kinda think the borrower probably did pay too much last year too. It's the 2017 sale about a block away that is really worrying me at $70k below subject's last year price. Waiting for the agent to return my call, just hope she is not on vacation this week (or is reluctant to call me back to explain why she sold two similar lots in the past year with a $30K+ difference in the $200K price range).

If the price was 70k higher , instead of lower, it wold not worry you. The market is speaking and sometimes we don't like what it has to say. Either your borrower paid too much when they bought it, and /or prices have declined. The combination of both perhaps..I've had to explain that very thing a number of times.

I'd devote time seeing if the prices for lots and homes or both are behind a year ago in the subject market area. Look at active listings , and even expired listings, of vacant lots or depreciated homes selling for lot value, how long on the market, price reductions etc. Try texting and emailing the agent, particularly if on vacation sometimes they respond better to that...or get feedback from agents with active vacant site listings, if possible. If the market has shifted with less investor or spec home buyer interest for vacant sites they might know.
 

Michigan CG

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Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
It would be foolish not to include that sale. Is it not a sale? Is it not comparable?
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Individual residential lots have a lot of uncertainty built-into their valuations. The specific motivations of buyers and sellers can influence how they price/buy the property to a greater degree that occurs in most improved residential sales.

Since this is a vacant land appraisal, there are no GSE, etc., guidelines that I'm aware of that come into play. Using the subject as a comparable would be appropriate in my opinion.

Good luck!
 

Bobby Bucks

Elite Member
Joined
Jan 27, 2002
Professional Status
Real Estate Agent or Broker
State
North Dakota
Since any previous sale of the subject should be researched, reported and analyzed as a part of the assignment, I've never utilized the subject as a comparable. I have been informed that it's a common practice by those with Facebook designations. :- )
 
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