Bill is the President and Chief Appraiser at BDAppraisal Group, Inc. With over 16 years as an FHA Certified residental appraiser as well as an award winning, commercial/advertising Photographer for over 20 years.
When researching for comparables relative to your subject, there are certain criteria appraisers use as a genral guideline for appraisal reports. Generally speaking, I will begin by using a one mile radius search from subject, +/- 30% of subjects above grade living area (GLA), go back in time twelve months and perhaps +/- twenty years from age of subject. These criteria can then be expanded if needed, due to lack of inventory or specific subject features; Unusual bedroom counts such as one or no bedrooms on above grade levels, waterfront properties, mountain or wooded views. You should recognize that appraisers are required to bracket subject features as listed on the market grid of an appraisal report. This applies to location, views, lot utility, age, bed and bath count, gla, heating type and garage utility as well as any other substantial features. In an appreciating or declining markets, an appraiser is required to utilize at least two sales that have occured within the past ninety days. This is where the distinctions between a Realtor's CMA report and an appraiser's research may differ. An appraiser or Realtor better have a very good reason to use a new construction comparable when the subject was built in 1920! The short answer is they shouldn't!
If after doing this research, you do not find credible comparables that meets these guidelines, you have to ask yourself why and what affect that the subject's features may have on the pricing of your subject. If the subject is a 500 sq ft, one bedroom home on a 2,000 sq ft lot, you should attempt to locate a comparable that brackets these features. If the subject's neighborhood is filled with 600 sq ft homes, priced between let's say, $350,000 to $400,000, but the one sale you find that is 500 sq ft or smaller sold for $300,000, you need to know that the appraiser will have to address this issue. Rest assured that the underwriter will notice it as well. If your search brackets the subject's features and your listing/sales price brackets the range of comparables found, you and your seller/client can feel much more comforatable with their pricing.