Is it true that when doing an appraisal, the appraiser will only consider houses in the immediate subdivision and not homes within a one mile radius?

Asked by Ms. C., Fuquay Varina, NC Sat Feb 5, 2011

I live in a subdivision where there are approximately 219 homes. A number of them have foreclosed. I am concerned that this will affect my asking price. I was informed by my realtor that when obtaining comps, the Appraiser will only consider homes within the subdivision and not homes within a one mile radius. Is this accurate information.

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7
Mark Atteber…, Agent, Louisville, KY
Sat Feb 5, 2011
BEST ANSWER
Not True. The guidelines for an appraisal are homes of similar size and stature within a one mile radius and sold within the last 6 months. Age, square footage and style all matter and may make for better comps. Additionally, they do not want to cross major highways or other dividing markers (think "wrong side of the tracks").

Good Luck! Selling your home should be a great experience when you have the right Realtor!

Mark Atteberry, Expert Louisville Realtor
0 votes
Jim Laudate, Agent, Cary, NC
Sat Feb 5, 2011
Hi Ms C. Since you have a realtor you should listen to him/her. Unfortunatly, foreclosures do affect value in a big way. Ideally, the comps for an appraisal should be for similar homes, compare a ranch to a ranch and 2 story to a 2 story, condo to a condo, etc. that have sold in the same subdivision in the last 6 months. If there are not enough sold properties, at least three, then the appraiser may look at a similar (in the appraiser's opinion) subdivision as the subject home. It's up to the individual appraiser.
1 vote
Kim Hernandez, Agent, Holly Springs, NC
Mon Apr 18, 2011
In some situations it is accurate. However, Appraisers will look for comps outside the neighborhood if there are not resent closed transactions. Normally they look within a 5 mile radius in this situation. Unfortantly, foreclosures are having a big impack in neighborhoods. Appraisers also look at a number of other things in their consideration; ie. the square footage, lot size, home design (1 story ranch or 2 story), features, energy efficiency, etc. So, in short, foreclosed neighbors will affect the value of your home to a point.
Good Luck and I hope this information was helpful.
0 votes
Sergio Herna…, , Naples, FL
Wed Feb 16, 2011
If there is an insufficient number of comparable sales in the subdivision, an appraiser will go outside the subdivision to find comparable sales.
Web Reference:  http://www.golftobeach.com
0 votes
Krista Abshu…, Agent, Fuquay Varina, NC
Wed Feb 16, 2011
When I have spoken to appraisers in the past about this precise question I was told the following. They try not to use the Foreclosure and Short Sale Comps in the neighborhood unless they are the majority of what has sold in that particular community. Now on the times that they do have to use foreclosures as comps; they may give a slight adjustment on the value of the non foreclosure home versus the foreclosure. However what is probably most important to know is that wonderful phrase- "it varies." Every situation is unique and each appraiser is following the rules of the bank that he is performing the Appraisal for. I know it is frustrating, but have faith that the real estate agent you have chosen to represent you is knowledgable and has conducted his/her research.
Best wishes to you on getting your home sold!
0 votes
Belinda McCa…, Agent, Cary, NC
Sat Feb 5, 2011
Not entirely. But others must be like kind if considered. Condition will help. Many foreclosed homes have missing appliances or damaged.
0 votes
Linda S. Cef…, Agent, Franklin, WI
Sat Feb 5, 2011
They will consider the closest in make, model, year, size and so on in proximity to the subject property. Unfortunately, the foreclosures and short sales are taken into consideration. The simplest explanation for the reason is this:

If you are a buyer and there are two identical homes for sale within 6 blocks of each other and all other things are equal, one is a distressed property and selling to $80,000 the other a conventional sale and selling for $100,000 - remembering that all other things are identical - which one would you buy?

If you said the $80,000 then you are like every other buyer in the world.

Now, let's say you are the bank giving the loan. If the new buyer defaults on the loan, how easy is this home going to be to sell? $100,000 or $80,000?

In direct answer to your question, if the appraiser cannot find a comparable within 6 blocks of your home, they will venture out as far as they have to in order to get that comp. - looking, of course in an area where all things are equal once again.

I realize this is a very simplistic explanation, but I have been told it is much appreciated.
Web Reference:  http://www.lindacefalu.com
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