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How to Get a Fair Market Value Home Appraisal When There Are No Comparables

by Steve Lander, studioD

When appraising homes, many appraisers use the sales comparable approach. In the sales comparable approach the appraiser looks at recent sales of similar houses and uses their selling prices, after adjusting them for differences between them, to find a value of the home he is appraising. However, if you don't have any recent sales comps in your area or if your home is unique, conducting a sales comparable appraisal can be impossible. Nevertheless, the appraiser is still tasked with coming up with a value.

Build a list of similar properties. The appraiser might not be able to find comps if she isn't familiar with the area. By providing her with a list of potential comps, you may be able to prevent the problem of not having any comps.

Take a longer view. While, in a perfect world, sale comps are taken from properties that sold within a few months, if they are scarce, the appraiser may need to use historical data and adjust it for time.

Expand the geography. Comps normally come from the same neighborhood, but there may be also other neighborhoods that are similar in terms of demographics and amenities as well as offering similarly priced houses. Including sales from those comparable neighborhoods can give an appraiser a larger data set with which to work.

Conduct an appraisal using the cost approach. When there truly is no market data, a property's value is usually estimated based on the underlying value of the land, sticks and bricks that make it up. Appraisers can take different angles when applying the cost approach, but it is generally based on using sales comparables to estimate the value of the land, then looking at what it would cost to build the building and adjusting that cost for the building's current condition.

About the Author

Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.

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