Lake Lanier Blog
The Anatomy of Comparable Sale Selection
November 2nd, 2019 8:22 AM
Comp selection is at the HEART of the appraisal process. First off what exactly IS a comparable sale? In a nutshell, it is that sale which would be the best replacement for the SUBJECT property if that property was no longer available for purchase. Would a buyer reasonably consider purchasing this other property in place of the Subject?
Yes or No!
What are the steps in comp selection:
Consider the Bullseye.
We start by first looking inside the same development or immediate neighborhood of the Subject.
is key because it means it is the most similar to the Subject and inside the same school district, which drives buyers decisions many times. (That is not to say we won't select a comp in another school district, but we must be prepared to make adjustments for any locational variance if we do).
Next we want similar style:
If the Subject is a ranch, we want to select other ranch homes. Buyers purchasing ranches like either the style of them or the fact that they have no stairs. So even if we are inside the same development, we may not choose a 2 story home to compare to that ranch, because that does not represent the actions of a typical buyer. Unless most buyers want to be inside THAT popular development regardless of style. Appraisers then need to recognize location influence over style. Knowledge of the area by an Appraiser is crutial in this particular case.
Next we look at year built
quality and condition of the home.
If the Subject has been nicely renovated, then we do not want to select a home that has no renovations or updates, even if it is located inside the same development. We would be better served to expand the distance around that Bullseye to find a comparable renovated home. If you were a buyer and wanted a nicely renovated home you are not going to buy one that needs alot of updates.
Next we look at date of sale.
Ideally we want a sale that occurred as recently as possible. Recent sales provide the best indicator for market trends. Preferably a sale that is no older than 1 year from the date we conduct the appraisal. However if we find a sale inside the same development or one nearby which is most similar to the Subject and it is over 1 year old, we can use that sale as an additional supportive comp to the primary 3 comparable sales that the Appraiser typically uses in most reports.
Going beyond the Bullseye:
An Appraiser can and will go outside the Subject development if no good comps exist inside the Subject development. They just need to make sure that the location they select is comparable to the Subject's location. Don't expect an Appraiser to go inside a superior development with higher priced homes and superior amenities for their comparables.
Remember, would a buyer do this? The answer is likely NO unless they are willing to pay much more and then we are not comparing apples to apples any longer.
never put restraints on Appraisers to stay within 1 mile or within 1 year for comps. Lenders placed these stipulations for comp selection. If the Appraiser can provide good reason to go beyond the Bullseye in distance or time to find truly comparable sales, then they can do so.
Always be thinking about what the BUYERS are going to do. If they are looking to purchase the Subject and it was no longer available (and assuming they are not going to pay more) then what other properties in the area will produce the best replacement for that property?
If you read this to the end, Congratulations! Now what was the one thing I left out here?
That will be the subject of another newsletter. Appraiser's must determine the appropriate adjustments for any variances between the comparable sales and the Subject. Most sales are not exactly the same as the Subject. The sole purpose for the adjustments is to make the comparable sales EQUAL to the Subject. There are various ways that this can be done, but it takes alot of experience and knowledge of the market.
Thanks for stopping by and be looking out for my next newsletter...
The ANATOMY of Adjustments!
If you have any questions or would like to schedule an Appraisal call or email me.
[Lanier Appraisal Service]
How do appraisers select comparable sales
comparable sale selection
how appraises do their jobs
Posted by Mary Thompson on November 2nd, 2019 8:22 AM
Post a Comment
Subscribe to this blog
Leave a Comment
Characters from the image above:
Subscribe To My Blog
Characters from the image above:
The Anatomy of Comparable Sale Selection
OFFER PAD, OPEN DOOR ARE THEY WREAKING HAVOC ON THE MARKET
Why get a Pre-Listing or Post Listing Appraisal from Lanier Appraisal Service
Lanier Appraisal Service interviewed by WDUN Radio
PIW PROPERTY INSPECTION WAIVERS...GOOD NEWS????
Mary Thompson 5 Star Review Appraiser
INTRINSIC VALUE VS. MARKET VALUE. WHAT IS THE DIFFERENCE, WHY DOES IT MATTER?
Lanier Appraisal Service on WDUN Radio Talk Show
Lanier Appraisal Service voted best Real Estate Appraiser in Hall County, GA
SQUARE FOOTAGE IN APPRAISALS...NOT IMPORTANT?
How we appraise lake lanier properties in this drought.
LAKE LANIER TAX VALUES
The Perfect Real Estate Listing from an Appraiser's Perspective
How will appraised values catch up to current market trends?
10 Rules of Engagement with Appraisers that CAN impact values.
What Value do Appraisers Give for certain Home Amenities?
Realtors have more Control over Appraisals then they think!
Building Permits and How Lack of One Impacts Appraised Values
Why Buyers and Sellers NEED Realtors from an Appraisers Perspective.
How FMLS listings Can and Do IMPACT Appraised Value.
FHA Loans and What homes Qualify for FHA Financing. What Appraisers Look For.
Letter to Sellers regarding benefits of Pre-Listing Appraisals
Lanier Appraisal Service has started a Monthly Newsletter
Thank you Realtors for your Referrals! Keep them Coming!
VISIT MY OTHER BLOG ON THE INTERNET...ACTIVE RAIN
Are Appraisals Delaying Closings or are Lenders. Read On!
How do Building Permits or Lack thereof Affect Appraisals
Mary Thompson's Blog Page
UAD, Uniform Appraisal Dataset, Effective September 1st. How it affects you!
FDIC Sues LSI & CoreLogic LSI one of the largest AMC's out there!
Does Perceived Value Equal Market Value? You Decide!
Usual & Customary Fees for Appraisers are posted. Appraisers need to stand firm with AMC's
FANNIE MAE & FREDDIE MAC HEADING FOR DISSOLUTION? FHA LOANS WILL SEE DECLINE IN 2011 AND BEYOND
Lake Lanier Photo January 2011
Lake Lanier Sales Stats for First Half of 2010
HAPPY 60TH BIRTHDAY BUFORD DAM - MONDAY 3/1/10
Lake Lanier Boat Dock Permit Lottery has ended. No more dock permits available
Mary Thompson to be Interviewed By The WEATHER CHANNEL
Lake Lanier hits full summer pool Today, after over 4 years!
FHA to adopt HVCC as of January 1, 2010.
Lake Lanier Sales Statistics for 2009 First Half...We have hit bottom!
Mary Thompson Featured in Pink Ladders August Newsletter
LakeLanier.com well known business website helps Lakefront Radio come back in full swing!
Realtors YOU can take control over the New HVCC ruling in your sales contracts!
Why Appraisers use Foreclosures to value your property
Realtors if you are conducing-BPOs for lenders to value property you are breaking GA Law!
2008 Lake Lanier Sales Statistics second half of year.
Happy Valentines Day, the bailout may provide some hope for Lake Lanier
What would the White House Appraise for? Is it in a declining market?
Happy New Year
2008 year in review
New Venture Custom Slide Show Creations
1071 Coalition Meeting Tuesday 12/9/08
Mary Thompson selected as North Georgia Real Estate Examiner
1071 Coalition Formed to Fight Lake Lanier Drought Issues and Water Releases down south.
WGST and the AJC interviewed Mary Thompson regarding the Drought
The Weather Channel doing a Story on Lake Lanier
Lesli Smith Needs Your Help! Lake Lanier Realtor
Lake Lanier Real Estate News
Ever Heard of Active Rain Website? Yours Truly is listed in the top 15 of Appraisers Nationwide!
Will the courts decide that Drinking Water was not a planned Use for Lake Lanier?
Lake Lanier Sales Stats for First Half of 2008
Mary Thompson Number 1 in Hall County on Active Rain Network
Tim Russert Dies at age 58 of Heart Attack
Mary Thompson in top 25 on Active Rain Website
How to Say Thank you to our Troops
Lake Lanier Water Release News
Lake Lanier Sailing Club Commodore, Jim Chinik interviewed by Lakefront Radio
LakeFront Radio interviews Lake Lanier Sailing Club
Lake Front Radio Interviews Aqualand Marina General Manager
New HVCC regulations will have impact on Appraisers
Lakefront Radio Interviews the DNR
Interview with the Army Corps of Engineers
Lake Lanier Pending and Closed Sales First Quarter 2008
Lakefront Radio New Venture
Lake Lanier is Rising
Lake Lanier is Back in Swing!
Freddie Mac and Fannie Mae Agree crack down on lender pressure and mortgage fraud!
Lake Lanier Activity Picking up in 2008!
Lake Lanier Still has boat dock permits left!
Recession and Lake Levels On Lanier
There are Boat Docks Left
July 2016 (1)
April 2016 (1)
November 2015 (1)
April 2015 (1)
March 2015 (2)
October 2014 (1)
April 2014 (2)
March 2014 (3)
August 2013 (1)
November 2012 (1)
June 2012 (1)
May 2012 (1)
August 2011 (1)
June 2011 (2)
February 2011 (2)
January 2011 (1)
July 2010 (1)
February 2010 (1)
October 2009 (3)
September 2009 (2)
August 2009 (2)
March 2009 (3)
February 2009 (3)
January 2009 (1)
December 2008 (3)
November 2008 (1)
October 2008 (5)
August 2008 (2)
July 2008 (1)
June 2008 (5)
May 2008 (5)
April 2008 (3)
March 2008 (3)
February 2008 (2)
January 2008 (2)
December 2007 (2)
Appraisal Valuation (3)
Appraised Values (2)
Pre Listing & Post Listing Appraisals (1)
Real Estate Appraisal Information. (2)
Real Estate Appraiser Reviews (1)
Real Estate Listings (1)
My Favorite Blogs:
Sites That Link to This Blog: