An Appraisal begins with the subject property and works outward beginning with properties of similar age, size and amenities within a 1 mile radius, within last 6 months of "actual Closed Comps". If, there are no recent closed sales within that first 1 mile radius, then the Appraiser begins to expand the search radius out as far as 5 miles until they have 3-4 comparable closed sales. If the search reveals 3 Non-Distressed Closed sales and 1 distressed, Appraiser will typically use the 3 Non Distressed. Likewise, if the subject property Appraisal reveals several distressed sales within close proximity to the property, these will be used as it shows that there is significant downward pressure due to high number of distressed sales in that particular area.
Since this question was initially put forth last May 2012...the market has improved significantly. The number of distressed sales have dropped significantly. When I work with a Seller I always make sure to provide 3 Actual Closed Comparables for Appraiser, I simply print them out and place them on the kitchen table for his/her use. I offer this because often times an Appraiser assigned to evaluate a given property may not be familiar with the area and I find they welcome the Broker's assistance. If the comps used are apples to apples, there is no reason an Appraiser would not use them. Appraisers often get the bum wrap, they are not out to get the seller, they must uphold certain guidelines.