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Well if you have a unique property like acreage then that doesn't apply. This is for standard subdivision fare type of homes.
The comparable sales could be spread over 3 counties, the neighborhood is still an area contained within certain boundaries. These boundaries could be anything from the subdivision to a smaller area defined by geographical boundaries such as roads, rivers, vacant land, etc etc
One way of determining "neighborhood" is asking the question: how far would I let my child ride his/her bike in-supervised.
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For a standard single family home they like to try and be within a 1 mile radius or less.
You are thinking of an area from which the comparables sales come from which is very different from "neighborhood".
When dealing with a cookie cutter in a suburb a mile is a nice rule of thumb, wether the Subject is a SFR or anything else. In rural areas, however, this is not always possible.
What about "oversupply." The appraiser used the county to determine this, not the neighborhood or town. Also, What makes an oversupply, and do they have to be of comparables?
The house we're buying is a rare deal- it's a ranch in a town full of McMansions for sale, but houses in our range in that town are scarce. The appraiser included all of the county so that the oversupply of comparables in other towns was calculated.
In a normal market appraisers will look in as narrow an area as they can find homes that have sold.
When they look in a wider area they should still be constrained by type of neighborhood. Looking at everything in a county or multi-county range will be to dilutive.
In todays market I can see that an appraiser may have difficulty finding "neighborhood" comps. The appraiser has the ability to add in the location by breaking out the structure and land values.
What about "oversupply." The appraiser used the county to determine this, not the neighborhood or town. Also, What makes an oversupply, and do they have to be of comparables?
The house we're buying is a rare deal- it's a ranch in a town full of McMansions for sale, but houses in our range in that town are scarce. The appraiser included all of the county so that the oversupply of comparables in other towns was calculated.
If it is rare then it will be hard for the appraiser to find comps. I have seen appraisers go to "similar" type of towns in the same county or close counties to get a home that is more comparable than trying to adjust and stay in the same city. Some cities have a similar feel and will work as comparables.
Make no mistake, appraisers work hard on those rare and unique properties. They are TOUGH to price whether you are an agent or appraiser.
As for the oversupply issue, it depends on whether the county is a lot of small towns which then it would make perfect sense to use county data. We have counties in Oregon that don't have any large cities and so using city data makes no sense because there aren't enough sales to get decent statistics.
Look at the appraisal and see if the homes the appraiser chose are comparable homes. With so few sales happening in many areas, appraisers have a very difficult job these days.
I remember getting a call from a lender in New Jersey who was not happy with their own appraisers appraisal of a 14 acre ranch property down in a rural part of South Central Texas. They wanted to know why the closest comp was 20 miles away.
I had to point out to them that, this being Texas, and that part of Texas, that 20 mile away comp might very well have been two doors down!
As said, rare or unusual properties may have to have comps from further afield.
I can understand the faraway comps. What I can't understand is having a town in short supply of housing for sale under $225,000 but using the rest of the county which isn't as the basis for "over supply."
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