Lender · Salt Lake City, UT · Member since 2012 · 714 posts · 169 votes
When searching for comparables to determine an after repaired value on a property, how close are they from your subject property? In other words, are your comparables less than 1 mile from the subject property, less or more?
In some more rural or less populated areas I’ve seen comparables close to 3 miles away from the subject property. What do you recommend?
I'm no pro, but if a property is on one side of a busy street or major boulevard, even if the house is comp is within an eighth of a mile, it might not comp correctly.
hey Corey Dutton, this is a loaded question if you're talking about suburban/urban areas AND rural areas. They all comp differently...
Put VERY simply:
Urban areas, you want to try and stay within 1/4 mile and/or same neighborhood/subdivision.
Suburbs, you want to stay within the same subdv/neighborhood, sometimes this can be more than a 1/2 mile radius if it's a bigger sbdv.
Rural, it's all over the map (no pun intended). You'll really need to know the area or find a GREAT agent who knows the area to help with this one, because it's more about experience with different types of properties in various areas & educated guesses than distance.
I'm no pro, but if a property is on one side of a busy street or major boulevard, even if the house is comp is within an eighth of a mile, it might not comp correctly.
Corey Dutton You want to have your comps as close to the subject property as possible. However; in some areas, where there are no comps close by, find another area, as close as possible to the subject neighborhood, with houses of simiar quality, age, lot size, etc. and use those.
It's also necessary to dig a little deepeer. On homes that were sold, were they REOs, fixers, etc., that were purchased to fix and resell, or were they already remodeled?
The most important thing to remember is that you want to be comparing apples to apples.
I'm no pro, but if a property is on one side of a busy street or major boulevard, even if the house is comp is within an eighth of a mile, it might not comp correctly.
Actually, it would still be a comp if similar in size and bedrooms and baths and style. An adjustment would have to be considered for the location on the busy street; similar down adjustments would be made for location next to industrial property, next to train tracks, with a freeway running behind the property (a fence can allow separation for safety, but won't reduce the noise by much), etc.
When I'm trying to determine if one area can be used as a comp for another subdivision, I take a larger sample (read go back further in time) and see how the prices compare for each area. If they aren't to far off then I can be pretty confident they are comparable. I then will drive through the areas to makes sure there is no visible difference. You never know when one is in a flood zone..