Supportive — and Unsupportive — Comp’s
In appraiser (and Realtor) lingo, a “supportive” Comp (“Comparable Sold Property”) is one that substantiates the value of the subject property, i.e., the one that the Buyer is seeking to obtain a mortgage on.
Ergo, an “unsupportive” Comp is one that . . . torpedoes the value of the subject property.
How much discretion do appraisers have to include the first kind, and omit the second?
A little . . . depending on the subject home, and the type and character of nearby sales.
Factoring in Foreclosures (or not)
So, if there are no similar, recent nearby sales, it’s permissible to go further afield to find one.
However, what’s not allowed is to skip over a nearby “unsupportive” Comp, and instead go further out to find one that’s supportive.
Unless . . . it’s possible to distinguish between the otherwise unsupportive Comp, and the subject property.
That would be the case where the nearby Comp is a foreclosure, and the subject property is a traditional sale.
If the foreclosure is an isolated instance, it doesn’t establish a precedent for the subject property — which is critical, because foreclosures typically sell at deeply discounted prices.
By contrast, when the majority of nearby sales are foreclosures, there’s no escaping them, and the appraisal necessarily has to factor those in.
A second situation where the appraiser can legitimately skip over an unsupportive Comp is when there are big, documented differences between the subject home and would-be Comp.
Like, the subject home has a $100k new Kitchen, and the would-be Comp has original (and dated) . . . everything.
Of course, the key to being able to distinguish between two such homes is knowing the local inventory — which is where a knowledgeable Realtor comes in.
More than one deal has been saved recently by an especially on-top-of-it listing agent who, knowing the particulars of recent, nearby sales, engaged with the appraiser to explain why one nearby home was a good Comp, while another, superficially similar home . . . wasn’t.