Spark Global Limited Reports:
This is of course mutually beneficial when the real estate agent provides the appraiser with relevant comparable sales. The broker can be sure that the appraiser is reviewing comparable things for their property and hopefully getting the price the seller wants. In addition, while the appraiser still has to validate the information, this can save them time. Here’s what brokers and appraisers should be aware of when evaluating a property.
Do not use price-based comparisons
If agents have a predetermined value in mind, they will find similar sales to support this biased view.
Whether to pay attention to property characteristics
Look for properties of similar size (including finished basements), number of beds and bathrooms, lot size, views (e.g. waterfront) and features. Using a price per square foot is ideal, especially in neighborhoods where the actual size of homes varies widely.
Don’t go out of the neighborhood
Other communities may be less popular or more popular, which may affect overall value. Similar sales should only come from the immediate neighborhood where the house is located — even if that means choosing a slightly smaller or larger house for comparison. Brokers should never use sales from “better” neighborhoods to boost the value of appraised properties.
Consider neighborhood properties
Agents and appraisers should consider neighborhood attributes that may increase or decrease value opinions, including but not limited to:
The style and quality of the houses around here
The price range of nearby homes
Amenities (e.g., parks, greenways, or swimming pools)
Access to major highways and public transport
Don’t compare past sales
If agents pull data from six to 12 months ago, they may tend to pick the highest sales and focus on those sales. This is a mistake, as recent factors may be depressing prices in the area.
Whether to use comparable sales for the past 3 months
A tighter window would provide a clearer picture of what is happening in the market right now. If there is no recent comparison, go back even further. This is common in popular communities with low turnover, for example.