The Goldilocks Approach to Appraisals
Just like Goldilocks preferred the porridge that was neither too hot nor too cold, appraisers like to see a home that prices in the middle of its peer group.
In appraiser lingo, such a home is said to “bracket.”
In plain English, that means it’s priced more than a slightly inferior home, and less than a slightly superior home.
For purposes of doing a Comparative Market Analysis (“CMA”), the subject home’s peer group typically consists of the three, most similar closed sales, ideally no further back than six months. Depending on the part of town and activity, sometimes three months is now considered the max.
In fact, the subject home is supposed to “bracket” twice: before the comp’s have been adjusted — and after.
Adjustments are all the things that differentiate the comp from the subject home. It can be another bathroom, more (or less) finished square feet, a new Kitchen, better (or worse) condition.
Regardless, if the subject home doesn’t “bracket” a second time, after the comp’s have been adjusted . . the deal can be in trouble.
