Comp Analysis Inquiry: Geography vs Time

[Jace Lowe]

Hello,

Backstory

I am currently practicing CMAs so I can become more accurate at estimating the fair market value (FMV) of a property. I believe FMV is one of the main building blocks—and really the first major step—when analyzing potential real estate investment deals.

I am not currently a Realtor. I work full-time in cybersecurity, but I recently started studying for my real estate license. I did not see many major downsides to obtaining one, and I think it could be useful both as a side business and for my own investing. Having direct MLS access, being able to view properties more easily, and improving my ability to perform accurate CMAs are all big reasons I decided to pursue it.

I am probably still a month or two away from obtaining my license since this is not my full-time work. In the meantime, I would still like to practice performing CMAs to the best of my ability so that I can eventually do them quickly and efficiently without always having to rely on a Realtor to respond with answers.

I live in the Metro East area of Illinois, where comparable sales are not always concentrated within the same subdivision or even within a one-mile radius. A lot of the CMA examples I find online are based in larger cities where there are numerous comparable properties located very close together, which is not always realistic in my market.

From what I have gathered so far, I have been treating time as more important than geography. When practicing, I generally start by looking at properties sold within the last four months and try to stay as close as possible to the subject property. If I cannot find three suitable comps, I gradually expand geographically while keeping the four-month time frame.

Questions

1. When you cannot initially find enough comparable properties, which factor do you generally prioritize keeping consistent for as long as possible: time or geography?

   For example, if you cannot find three good comps within your initial time range and geographic area, would you:

   • expand the sale date range first, or
   • expand geographically first?
2. What is the maximum amount of time you would typically go back when searching for comps?

   For example, would you go back six months, nine months, or up to a year before deciding that it would be better to expand geographically instead?

3. If some of your comps are located outside of the subject property's immediate area or subdivision, do you make any type of location adjustment?

   If so, how do you determine whether an adjustment is appropriate and how much that adjustment should be?

I am mainly trying to develop a consistent process for selecting the best available comps in a market where there may not always be three nearly identical properties located within a mile of the subject.

Thank you!