CMA in an area with little & outdated comps

3 Replies

Hey BP community,

I'm trying to do a CMA on a property where there are little to no comps and if there are comps they're from 2017 or older.

Other than asking a realtor or using automated systems (zestimate) How can I compensate for this?

The reason why I don't want to ask a realtor is because I'm trying to figure out how to do this without their help until I actually find a property worth considering, rather than having them do a CMA on every property I come across.

Thanks for any insight!

There really isn't a good answer when there are no comps.  I find situations like this usually suggest the property is more risky, because there is less liquidity (ability to sell and someone getting financing for it).

Is it a multi-family? If so how many units?

If there aren't good comps then the bank appraiser will probably rely on the Income Approach for the appraisal. They would just take the net income of the property and multiply it by the local CAP rate to come to an appraised value.

So if the net income is $50,000 and you're in an area where a 10% CAP is normal the income approach would tell you it is worth $500,000.

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