Agents often share relevant comparable sales data with appraisers to help support value.
B/c of this we often share basic appraisal guidelines with agents to ensure they share comps that appraisers can actually use.
Comparable Sales Appraisers Can and Can’t Use is just one example from a past blog. Comps can’t be too large, too far away, too dated, etc.
But, our Appraisal Manager, Jennifer Muzzall, often reminds agents to also share ALL of the low comps in the area too – even if they do NOT appear to support value.
This is b/c there are often explanations as to why those comps sold for as little as they did, and nobody knows those explanations better than the agents who are in the local markets.
Jennifer’s example is a particularly low comp near a subject property that was killing value until we found out from a local agent that the comp was literally awash in cat urine. :)
The comp stunk to high-heaven and it sold for far less than what it otherwise would have b/c of the urine – and there was no mention of the smell in the MLS comments or anywhere else.
The other reason to share low comps with explanations is b/c both human and automated reviewers will always see ALL of the low comps.
And if the low comps are not used (and explained), many other issues arise, as I explained in this recent blog – Why Appraisers Can’t Ignore Comps.
Suspicious underwriters will call for appraisal reviews; suspicious review appraisers will cut value significantly if they sense anything is awry; and automated reviewers will assign too high of a “risk score” to the appraisal, making it unusable in any case.
So – please share the low comps too – along with explanations in regard to why they sold for as little as they did.
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