This week’s blog, Do You Confirm Comps or Verify Them? is a guest post written by Timothy C. Andersen, MAI, MNAA, MSc, CDEI. See below for a more detailed bio. Do you confirm your comps or verify them? Is there a discernible difference between “confirm” and “verify”? Is one the due diligence of a professional? Do our […]
“I know a good comp when I see it! I have good judgment. I know my market. And I’ve been doing this for a long time.” (Oh yeah – I’m also pretty smart.) What do we learn to get an appraiser license? We are told that a comparable is competitive to the subject. Then, a […]
Take a sample or pick comps: different or the same? Most of us grew up first learning descriptive statistics: mean, median, standard deviation and such. Later, we learned that it was usually impossible or too expensive to get all the data, so we got a sample which seemed to be like the whole ‘population’ we […]
Appraisers study some economics. Data training is “pick comps carefully.” AVMs use data. AVMs (Automated Valuation Models) usually use a lot more data, even dozens or hundreds or …. Appraisers usually pick six or seven comps, based on good judgment and training and experience. We are told comparables should be similar and competitive, so they […]
The “Appraisal Process” requires good judgment in picking comps. USPAP (Uniform Standards of Professional Appraisal Practice) uses the word comparable 95 times. Comps MUST be important. However, it is not defined. The Appraisal of Real Estate states a comparable must be similar, competitive, and “able to be compared.” In the 14th Edition, it is used […]
Reviewers ask why a certain sale was not used as a comparable. Why don’t they know I already used the best comps, just like I was taught? Don’t they know I used what was competitive, similar, and “able to be compared” – Just like The Appraisal of Real Estate 15th ed. says: A good comparable […]
Picking comparable sales is critical. Selecting the ‘best’ four or five ‘comps’ requires experience and training. Appraisal education tells us a good comparable is competitive, similar, and able to be compared. Customary training and practical experience generally focus on analysis and presentation of three to six comparables. Unfortunately, this is NOT what is required by […]
Three comparables have been the standard for many years. On the residential appraisal side, some clients ask for more (such as current listings). For ‘general’ appraisal, typically four to six comparable sales are enough to achieve believability (credibility). Believability arrives at the user’s desk in a readable report. In the past, the standard residential form […]
There are three specific terms used to define what is a comp. It should be competitive, similar, and able to be compared. Competitive means what a ‘typical’ buyer would consider as between the comp, and the subject, if they were available in the marketplace at the same time (the date of value). Similar means “resembling […]
How many comps should I use? What do “authorities” say? Historical appraisal practice, as passed on from trainer to trainee, in the outdated master/apprentice model that imposed strong inviolable dictates. For residential forms, the magic number was three, sometimes up to five or six. Three and a subject column fit perfectly on a 8 1/2 […]
Ah, this is easy – pick comps! This was pretty easy, compared to the many other things I had to learn. It was a little harder than making adjustments though. For adjustments, I had an adjustment sheet. I foolishly asked how the numbers were arrived at. The answer was “It comes from many years of […]
The three ways are: 1) pick using good judgment; 2) draw random sample; or, 3) use all relevant sales. Editor’s Note: This is part 2 of the series ‘Three Ways to Pick Comps‘. When I became an appraiser, good judgment ruled. Commercial data was not available, and the MLS comp book came out every three […]