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When there are no Comps?

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Smokehouse

Thread Starter
Junior Member
Joined
May 7, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I have a question:
I am doing a condo appraisal, the subject has been one owner occupied for some time. Routine maintenance at best has been completed over the years definately no new carpet, paint etc....

There have only been 2 sales in the past year in this complex, there is one active/pending in there now and I have about 4 outside sales that are all very similar with regards to age, construction and appeal.

Question, the photos in the MLS of the comparables as well as their description indicate superior overall conditions, new carpet, appliances, paint. Just making baisc adjustments for size and a few amenitites they are ranging from 113-117k. The subject is selling for 103k. Given the market and the lack of sales in similar condition, how would you address this. I know the UW will want at least one comp in similar condition in the grid but what if there isnt one?
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Comp 5, necessarily a 1-3 year old closed sale (and/or which exceeds standard distance guidelines) adjusted for Market Conditions, effectively brackets the subjects' condition. ML data, confirmed via verbal discussion by the Listing/Selling Agents indicated it had been relatively well-maintained, reported no recent renovation/updating, reported similar quality, effective age, view, utility and general appeal as the subject. This comparable, after appropriate market-indicated adjustment for [Time and/or Location (etc)], further supports the Final Value Opinion for the Subject and necessarily serves as the basis from which to extract condition adjustments to comparables 1-4. Most weight is placed on most recent comparables 1-4. While preferable to utilize more recent comparables, if possible, no truly competitive with the subject in terms of condition were reported by Municipal and/or MLS Records within the prior 12 months. This is attributed to high demand for similar units due to " __________" and, in the Appraisers' opinion, has no adverse impact on marketability of the subject property.
 
Last edited:

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
What condition is the listing in? Are there floor level or view differences you haven't considered, what about the project amenities between the subject's project and where you found the comps? Is the subject a "short sale"? Did the comps sell furnished and maybe your subject isn't? Go back in time if you need to. Find listings in the project where you found the sales (comps), are the list prices going down in that project?

You have more research to do.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
There are always comps...maybe just not good ones!
 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Sounds like the subject's sales price is reflective of the market's reaction to its lack of updating. It is what it is, the need to find something that is in similar condition is absurd; instead, outline the things that need to be done: painting, carpet, kitchen cabinets, etc and provide an estimate cost. Then apply a market factor to reflect its reaction to having to do these items. Generally 150% to 200% is a good starting point, depending on the cost and time.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
"Then apply a market factor to reflect its reaction to having to do these items."

Supported in the appraisal report by "gut hunch"? or adequately supported by the available market data contained and explained in the report? Duplicatable on Review?
 

lmichels

Sophomore Member
Joined
Feb 15, 2007
Professional Status
Certified Residential Appraiser
State
Washington
About a year ago, I started writing in the appraisal report that "There are no properties of similar XXXX (condition in your case) within zzz miles of the subject with the past zzz months". If it's a more several lack of comps, I'll put in something like "There have been 4 sales within 2 miles of the subject in the past year. However 2 are manufactured homes and 1 is a trasaction between family members. The last was included as Comp #3 but is disimilar to the subject in several aspects and is given minimal value. Due to lack of similar sales within 2 miles of the subject, appraiser was required to consider sales located up to 5 miles from the subject, older sales, sales requiring larger than desirable adjustments, and sales with varying design, quality, size, age, and condition." Occasionally underwriters actually read this and leave me alone. If they don't read it then you get bonus points with the client by pointing out that you already addressed it and the underwriter can't read.
 
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