Appraisers: What if there are no comps?

Question

I'm buying a duplex and the first appraiser just backed out, because he couldn't find any comps.

What happens when there really aren't any like properties that have sold within the past 6 months?

Nobody here sells their duplexes, because they're cash cows. So, the only other duplexes that I can find are either a 1/1 900sqf fixer-upper for 20K or a 2/2 1400sqf fixer upper for 75K. This is a renovated 6/2 at 1800sqf.

Do you keep going further out, miles away? Do you use the fixer-uppers (which really isnt fair) or is there a time when you're allowed to use the income approach for a duplex?

Chris Mason · Answer

They can go back 12 months if needed, and/or go out past the 1 mile mark, etc.

If there are truly are no comps even when they look wider and farther back in time, then the 'party line' answer is that there's no evidence of any demand for this type of product in the market, making it bad collateral for a secured loan.

Your lender can't cherry pick the appraiser, but if it's not a big bank or credit union they can pick the appraisal management company. One of the AMCs I use will do a 'sneak preview' thingie for $50 that goes to their little special team of super experienced appraisers that do the tough ones. They meet, do their thing, and give it a yes/no typically same-day & with a specific appraiser in mind that can handle it, if it's ordered in the morning.

Michaela G. · Answer

There are plenty of duplexes here, but nobody sells them, because they bring in so much rent. There is demand, but no supply.

Even going back 12 months, the only ones sold are the fixer-uppers that investors bought and are now holding on to them.

The neighborhood is exploding right now and SFH are being renovated and flipped and are going up about 10K/month, but duplexes aren't being sold.