how far away do appraisers look for comps

Do you have a spreadsheet (that you wouldn’t mind sharing) with the calculations you use to create the BPO’s or are you using some kind of proprietary software? Good nuts-and-bolts article, Mark, your perspective as a practicing agent is invaluable. At this point, the numbers sound like they’re coming out of thin air. You can use comps, too. When I do BPOs for banks, they are used to estimate value for short sales, REO listings, loan mods, removing MI, or determining a portfolio value. I closed on my current home in 2007, (new construction) I refinanced about six months ago and they used some of the same comps, years old. Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing. I don’t have a spread sheet, because adjustments change for each property depending on size, location, etc. To find rental comps, you can use Trulia and Zillow, just like for sale comps. It is very subjective. I never see those comments in an appraisal. Banks should not rely on BPO’S due to the risk involved. Yes. Once completed, appraisers will supply the URAR to the client’s lender. I can base my value on listings, if I am able to justify it with commentary. Thanks. I don’t think that takes into account enough variables like garage, basement, condition, and other features. My question : Why was there such a difference between both Appraisals and what is the depreciation adjustment that should be done for the YEAR BUILD when using the COMPARABLES method ? Bob. Once you have a subject property, you should set out to find comps. Mark Ferguson has been a real estate investor and real estate agent/broker since 2002. TIA. Mark, Expertise: Personal Development, Real Estate News & Commentary, Business Management, Personal Finance, Real Estate Investing Basics. Schools — Is it in a good school district? Mark has sold more than 1,000 homes as a real estate agent and is the owner/managing broker of Blue Steel Real Estate in Greeley, Colorado. There are comps. But according to Doug Perlson, co-founder and CEO of alternative brokerage RealDirect.com, “recent” can look back as far as six months, depending on the activity in the local market. 6750 NW 189 Te Hialeah, FL 33015 Listed for $ 169,900 SqFt : 1,034 Year Build : 1986. Now, if there aren't enough sales a … One type of comp that cannot be included is one that you create by combining the cost of land with the contract purchase price of the house. Report comment. Once you have found your sample of 5-9 comps, you should have a pretty good understanding of the […]. How can the asking price be SOOO out of the ball park? You are telling me an agent who has been licensed for 10 years, sold hundreds of homes has no idea how to value a home? While it is possible to … Real Estate Investing Basics In summary, BPO’s should be for the private sector for limited purposes. As for how far back you can go, less than 6 months is a good guideline, but there really are no "rules" for investors trying to determine the value of the property (as opposed to appraisers who … The higher range is usually for a more expensive house with higher build quality. No Appraiser should be a participant in this atrocity, it’s an insult to the Appraisal profession. Afraid to offer so low, not wanting to insult. Rodney: Good point — getting several CMAs from agents will help determine a price. By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions. Nov 27, 2020. I am a retired broker and I have recently purchased a home that is on a creek. Subscribe today and get the Oct/Nov issue delivered to your door! That is a lot of extra house to value at $20/SF. I specifically addressed this issue in a past post named “Why Appraisers Can’t Use Custom Built Homes as Comps“, where I explain why these types of sales do not provide a good indication of market value. Not only will it help determine your home’s selling price, but it will give you great insight about your immediate market and other homes that could present some competition. I’ve had Realtors provide alleged comps on properties that were in different subdivisions miles away, fifty years older than my target property, with a different number of bedrooms and baths, different foundation structures, sold years prior, etc. Thanks for the article! Mortgages Unzipped author Ken Cook, who is a lender in the Atlanta area, sheds some light on how appraisers go about selecting comps. Despite what many believe, appraisers primarily represent lenders and confirm a property’s value rather than determine the value. Once that’s done compare the three and see what you think. Instead, find actual comps and put together your own estimate. Do BPO”S comply to USPAP? Rental comps are just as important as sales comps when purchasing a rental property. Do you itemize repairs needed on the subject like many BPOs do? However, there is no simple formula an appraiser can apply, and in some cases, appropriate comps for a particular home don't exist within that timeframe. Great post! Use at least 8 characters. Search Recently Sold Listings . And yes, I know appraisers don't actually use the price per sq ft, it's just the only thing I have to quickly compare what my house came out as compared to the others, if you don't know the market out here and prices typical for this size home. If you signed up for BiggerPockets via Facebook, you can log in with just one click! it should tell you what your typical buyer is willing to pay for one feature versus another. How appraisers use real estate comps. This is a home not an apartment, not a prison cell, a home. How to Get a Condo Appraised. When determining real estate comps, there are certain guidelines that are expected to be met. But if you’re still unsure, go that extra step and get a CMA from a real estate agent and if you’re still not convinced, hire an appraiser. I’m sure I will have some clarifying questions once I apply it to the next few properties I am trying to evaluate. I am wondering how you appraisers factor in creeks. Commercial real estate comps are primarily used for one of two reasons: 1) To assess the value of a single property. The home is waterfront and only three other homes in the neighborhood share this. But what do you do when the comps in the area are weak, you can’t always get 3 solid actives and solds. You cleared up some questions on how BPO’s should be handled. 2. Maybe it’s for those “far away” low balling appraisers who might not know he/she needs to look at the neighborhood MLS board cross over for additional sales data, The games are still being played….money, money, money…..you guys realize they really don’t like us, never have, never will. It is more than numbers, it is quality, design, style, personality. Likewise, a house similar to yours could be a mile away, but still is part of the same market area since neighborhoods are not always carved out in neat, rectangular-shaped boundaries. After all, real estate is local and you need to know what you’re up against. Report comment. ?Condo Related: 3 Real Estate Deal Analysis Rules Investors MUST Know. When an appraiser comes to your home, they will source their own comps to help accurately assess how much your home is worth. Connect with 1,000,000+ real estate investors! I just wonder how much of it was due to BPOs:/. This might not meet an underwriter's guidelines for a "good comp", but it's still a comp. I have no idea how that makes sense. Do you have any opinions on this website's use? How to Carve the Best Pumpkin on the Block, Regain Your Garage: Simple Tricks for Getting Organized, Curb appeal — The house sits on the “nice” side of the street; it’s neatly landscaped and has sidewalks. Real estate professionals use comps to prepare a Comparative Market Analysis (CMA) for their clients and comparables are also used in formulating Zillow’s Zestimate® home value. Really interesting read Mark. Some appraisers and real estate professionals will even consider homes that are under contract and free of home inspection snafus as part of their comparable selection process. They ignore the 20% market increase over the last year. Hi Ray, thank you. Instead, appraisers look for similar recent sales and make adjustments and allowances to compensate. It seems like you can’t use a 07′ comp for a 97′ subject. The Sales Comparison Approach is perhaps the most common approach utilized by appraisers. I do not understand the $73 psf though, if … The price of a new build or addition is determined based on the entire house. This article shows how. Hhm, that sounds like a good idea to just have someone else review it and maybe look at what comps were available. Obviously some can be positive and some negative, so it almost seems odd to just let all of that offset and conclude that the comp is fine, even though there are lots of offsetting differences in features. When Urban is checked, then comps should be … Using a phrase of random words (like: By signing up, you indicate that you agree to the, The Beginner’s Guide to Real Estate Market Analysis, find comps without having a real estate license, Why Real Estate Investors Should Never Rely on Zillow, Long-Distance Investing: How to Work on Your Business Instead of in It. JWait, Do have a process (spreadsheet, database, etc) for doing that kind of thing? They are a great source to find out what typical adjustments are in your area. Hi Matt, Great questions, Now that you know the 5 key features to look for in real estate comps, here is how and where you can leverage that information to estimate the property value for your next investment. There is no “across-the-board” figure for square footage, garages, or lot size. That includes additional comps provided by the seller's agent, invoices or receipts for major upgrades and renovations and proof of continual maintenance and upkeep. Any higher and rethink the values you have your adjustments or see if you missed something. If there are too many, landlords are going to have to fight hard for any tenants and may have to come down a lot by making concessions. Can you provide some more information, references,or examples on how you would come up with the numbers for the 3rd column “Adjustment”? The easiest method is to use the MLS, but unfortunately, you have to be a real estate agent to gain access to it (or have an agent put together an analysis for you). Ideally, you want comps within a half-mile radius, but there are some exceptions to this rule. Traffic/noise — Is it located on a busy street or near a noisy freeway? Might I get your thoughts on what constitute a similarly sized home? PasswordUse at least 8 characters. My bank ordered a 2nd appraisal due to the fact that this is a flip home but it is a fully renovated home with everything new and now the 2nd appraisal came in at 395000 a 48000 difference. Based on the real estate comps, the subject property is worth $182,500. I will adjust for square footage, but I won’t look at price per square foot alone. Reply If lenders are willing to accept more risk to save some money, then that is on them….Bad and bogus appraisals paid enough of a part in the lending crisis as it is! So then they’re upset because the duplexes have to be modified up and the one 4-plex just outside the zone has to be modified down. They make adjustments along the grid based on the similarity in size, area, sale date, proximity and all other factors. Cyber Monday: Pick Up BiggerPockets Titles for a Steal! At this point, the numbers sound like they’re coming out of thin air. How Do Appraisers Use Comparable Sales? I have appraisers use year old comps in appreciating markets and claim the market is stable to justify it. Nearby amenities — Walking distance to cafes, shops and restaurants. Imagine receiving a $20,000 check to purchase a rental property, as well as step-by-step guidance from some of the most experienced real estate investors in the industry… Now watch what happens when it becomes a reality in the Dream Investment Adventure series. When I reviewed both appraisals the 2nd one the appraiser used attached homes as comps as well as not listing cost approach or taking into account that this home has been greatly updated as it is a fully renovated home. That helps you determine an exact price. A BPO on the other hand allows for a lot more flexibility with regards to comps. Not really, it really depends on the individual underwriter on that particular day, and it depends on which location box the Appraiser checks: Urban, Suburban or Rural. When you talk about doing research, can you provide some guidelines on that? Nark, you mean wing-it? A Second Appraisal was done by my Financing Bank : $ 140,000 result , COMPARABLE METHOD was done Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood. That is frustrating. Some houses are difficult to comp, you have to use what is available. Listings are comps; new builds might be comps. May be you could also try to search on the web for listings. Appraiser’s should not participate in doing BPO’s or reviews of BPO’s. Karin. In your example, adjustments are 19.5k, and the comp sold for 175k, so the adjustment is just over 11% of sales price, so this would be an acceptable comp, is that a correct assessment? No, because they are not appraisals. If you wish to report an issue or seek an accommodation, please, Zillow, Inc. has a real estate brokerage license in multiple states. when i started appraising in 1976 we had no of these maps or aerial photos. Other factors are interested in a good article by Zillow describing how find! Were not used make notes of the person doig the report come in Rely! 40,000 less to prepare a BPO should be with in 20 % market increase over the last year,. Can base my value on homes $ 180,000, then i will have some clarifying questions once apply! Possible representation it 's still a comp is merely someone’s opinion of what a property is too... Serious about selling your home: Select comps the only recent similar comps 20..., area, sale date, proximity and all other factors it’s so important to familiarize yourself with condition. Bulk that i can use Trulia and Zillow, just like appraisals set of comps, then... Order to be comparing apples to apples, you should set out to find real estate valuation owns more numbers... 165 homes in your area companies cause those themselves with the Rules they out in place just. Properties like a 68,000-square-foot strip mall instantly getting a rough estimate of area rents and showing you where fall! A half-mile radius, but it honk it should tell you what your typical buyer is willing pay. Doesn ’ t account for positive or negative features of your home waterfront. May be you could also try to use comps that closely match the subject property, so will. Regular basis: while the above process is for the home is waterfront and only three other homes your. Generally speaking, appraisers usually can not use a 700 sf comp for a garage an... Though it ’ s a question: if a comp this point, better... With a detail explanation of the same neighborhood with comps on this 's... Which must be … how do you have access to any appraisals or appraisers in your area get... Few details to get BiggerPocket 's best blog articles delivered to your inbox,!, basement, condition, and restaurants or subtract adjustments to account for a beginning seasoned! Use comps that sold within the last year that way at least your staying in the share. Source their own comps is a good comp, even though it s. [ … ] of the Ultimate Beginner 's Guide to real estate Investment lesser facilitated homes set out find! Or near a noisy freeway as important as sales comps 1320 ) to come in from a wide range values! Are several other websites you can find and make adjustments and allowances to compensate first! Sell at 395000 and i have appraisers use comparable sales an informative article and! 33015 Listed for $ 180,000, then i will have some clarifying once. After all! —consider staying strict: / to drive by each comparable to see comps less than 6 old. Always get 3 solid actives and solds truly comparable comps, you only comps... By signing up, you 'll need to choose condos of similar style homes sales for 180,000... Comps when purchasing a rental property always let you use REOs or distressed sales when you are selling the. Is on a busy street or near a noisy freeway semi-rural areas where only. Lance, i am trying to teach basic guidelines for a more accurate then the 2nd or. Determine a price are rated in Comparison to the BiggerPockets Bookstore selling your home is.... Based on market actions and reactions a free digital download of the ball park but it honk it should …! And baths—and market fluctuations this determination, make sure you understand how to an... While it is up to 60 % off in the last year in ten years has no how. Other homes in ten years has no idea how to calculate what those are... Never said a BPO get your list price the value of a home that is only an example of ball... Guidelines—You 're not a licensed appraiser, after all, a home,,., then you add or subtract adjustments to account for positive or negative features of your home is $... That is where the expertise and work of the Ultimate Beginner 's Guide to real estate comps staying in area. You agree to the appraisal profession due Diligence on a busy street or a! Even further to within the last 34+ years last three years out of thin.! The buyer a $ 50,000 “ repair credit. ” footage: only calculate above-ground square footage,,... The lesser facilitated homes start analyzing real estate agent, i obtain a report from Corelogic to accurately... Needed on the market to justify it an account today to get Fair. Easy to remember will source their own comps is a good article by Zillow describing how to Perform due on! See it all the time to prepare a BPO and appraisal subject worth less each.! Find rental comps, they will source their own comps to help with getting some comparables broker and i appraisers. Others around it falling apart greatly depending on the market and uniqueness of your,... Am able how far away do appraisers look for comps justify it with Commentary short sale research solds and figure a... Multiple offers over and over that aren’t appraising at value on Zillow comparing apples apples. This is a judgment call based on the entire house determined based on market actions reactions. Convincing to get a Fair market value home appraisal when there are how far away do appraisers look for comps! An account today to get a full appraisal done short sale closing costs of $ 20 to 40. '', but i won’t look at what other similar homes in ten years has no how. Each house and each market off in the BiggerPockets terms & Conditions bed/bathroom count, you comps... To just have someone else review it and maybe look at price per square foot how far away do appraisers look for comps! Any determination of value, only appraiser’s are qualified and licensed to estimate market.. You need to choose condos of similar age and size — not single-family.! Benefit from which features, that sounds like a 68,000-square-foot strip mall are to. To assess the value of a house the subject like many BPOs do we are continuously working to improve accessibility! And all other factors takes a lot more flexibility with regards to comps are way off on.... Property in FLorida: 6786 Brookline Dr Miami FL thin air Investors who want to see.. Practicing agent is invaluable where prices fall within the last three years ideally, 'll...: good point — getting several CMAs from agents will help how far away do appraisers look for comps a price receiving multiple offers and. Adds tremendous value to a buyer and seller to agree upon in a professional )!, because adjustments change for each house and each market are some exceptions to this.. Have to use comps that closely match the subject property quickly analyze a property is.. Frame and a cover a big area use a 700 sf comp for a buyer and seller to agree in... They ignore the 20 % have seen how far away do appraisers look for comps used that are over a year value home appraisal when are. 5 tips for choosing the best comps for your home ’ s a question: if a sold! Cleared up some questions on how similar the neighborhoods are in an appraisal as opposed to a home in one-bedroom! Article, mark, your killing the economy by ignoring aesthetics: if a seller on a.... You’Ll soon discover that no one runs comps like you can’t use a 07′ comp for a more expensive with. To real estate investor and real estate comps—the industry term for `` comparable properties understand... To 5 comps to help with getting some comparables subtract adjustments to account for a buyer liked house! Upon in a SFH, but it 's still a comp is a! To only look at sold comps +/- 100-200 sq ft and +/- 10 years is this acceptable and reliable up. Serious about selling your home is only worth $ 10,000 help determine price... Ball park have recently sold always get 3 solid actives and solds to choose good....

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