Appraiser Using the Subject Property as a Comparable

5 Replies

Do any appraisers know if you can use the subject as a comparable?  My father-in-law is refinancing a property he purchased in April.  The appraiser used his purchase and purchase price as the number one comp.  I have never seen this done before?  Do any appraisers know if you can do this? 

That sounds way off!  Using the subject as a comparable means comparing something to itself!

John Thedford, Real Estate Agent in FL (#BK3098153)

Hmmm. I'm assuming that the your father in law purchased the home recently?  This sounds like something that should be avoided at all costs. There would have to be no other comps in the area to even think about it.  Still, it would be a slippery slope for the industry.

I have not heard of doing that (not an appraiser) but it sounds like the logic the city of Philadelphia used for tax appraisal. I'm not sure if they still do it, but the first three years of appraisals were based off of the sale price. If you paid that amount it was hard to deny the value being at least that. The logic here might be a reverse of that, stupid as that would sound.

As an appraiser I can tell you that it should never happen, clearly doesn't make sense, an underwriter should also call the appraiser on this as well. 

Agreed, didn't happen or should not have, sure this wasn't a BPO in appraisal form, I could see a Realtor doing that?

In a refi, the rule (again) is within one year, appraisal is based on the sale price or appraised value, whichever is less.

The new appraised value can be lower than the sale price within one year.

If there have been no significant changes in the market or condition of a property the sale price within one year is more reliable for the subject than other comps.

Your father probably got 3 other comps and the subject may be shown as additional data which may be shown in the same way as the comps, but you won't see any adjustments and adjustments were made to the other comps, taking in consideration the last sale, the current estimate of value was determined.

Comps are not to exceed one year, there may be exceptions when market conditions require it, in other words no other comp, if you get past 18 months in residential chance are the lender won't buy it, secondary won't. That indicates the market is not sufficient for the type of loan. USDA is closer in making these types of exceptions in time of sale in rural areas.

Never heard of a 2 year old comp, much less 3 in residential. The time frame desired is less than 3 months, 3 to 6, over 6 less than a year, over a year in exceptions, at 18 months you'll be dead in the water with residential, past is certainly not acceptable.

Commercial such as an industrial property is much different and the market comp approach is not usually the primary consideration.

If the appraisal came back at the past sale price, the other comps didn't indicate any significant change in market conditions, the value remains the same.  

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