Comps and Appraisal confusion

[Account Closed]

In my areas I rarely have problems understanding the comps unless the properties are non conforming. I'm working with a property that is exactly like its neighbors. A little subdivision of low quality construction, 1960s rectangles. They are all 1200 square feet with the same yards and attached garages. No additions. But the comps are truly all over the place for the same house. Two houses sold in December, one for $320K and the other for $230K. They are 3 houses apart on the same side of the street. The $230K was in good condition, with some updating and new paint and flooring. The $320K house is tricked-out with all new finishes and cute landscaping. The financing on them was the same (buyers with 3% down and max loan amounts).

Now there are a few rehabs of the same house listed at $320K, without any of the same finishes as the tricked-out house.

How did the appraiser on the tricked-out house get a $75/square foot increase?

[Ophelia Nicholson]

The appraiser probably went outside of the neighborhood. I had a house close last June that I couldn't find any comps to support the value and felt sure that it would never appraised- rehabbed with all the bells and whistles- Well the appraiser went outside of the neighborhood even compared the house to other houses that weren't even similar and came up with the value and the house closed.

The appraiser probably went for houses in similar condition to the tricked out house and probably didn't put the 230 house as a comp, it wasn't sold at the time so no way for them to say what it would sell for and they would have had to make too much of an adjustment if they used that comp.

The thing is once you have a high value in the neighborhood then all other rehabs following that one now automatically have a comp even if the rehab was not as great as the original house.