Writing to appraisers and underwriters, I am proposing a definition of a “comparable sale” in the residential sector.
First I must say that the word “comparable” in the residential real estate industry, is used by many who have no idea what it means. All of us appraisers receive e-mails and phone calls now and then asking us why we did not use a certain “comparable” in our report. Then, when we look at the sale that is being suggested as “comparable,” we find it is not at all similar to the subject.
My definition of a residential Comparable:
“A combination of land and house that is, compared to the subject property being analyzed, more similar in size, style, age, and location than any others in the marketing area of the subject property, and that sold more recently than others.”
So, for a sale to be a comparable, the house and land compliment should be similar to the “subject” property (the one being analyzed or appraised). Also, for a sale to be a comparable, the property should serve the same market as the subject property. And, for a sale to be a comparable, the house should be of similar age and style as the subject. And, for a sale to be a comparable, the sale of the property should have been more recent than other sales that would otherwise qualify as comparable.
From time to time I receive questions asking why I did not use “this comparable” in my report. In every case, the so called “comparable” sent was completely unlike the subject property, and, not comparable at all.
I have not been told where the people who submit this misleading information that they call comparables get them. But, whoever is supplying it should be questioned.
So, underwriters, please don’t send trash and ask us appraisers to defend ourselves with reasons we did not put trash into our reports.
And, please memorize the definition of “comparable.”
Ralph K. Olsen
pwas.net
