All Forum Posts by: John Yoo

Quote from @John Yoo:

I looked at the properties (similar properties - same number of units with same bed/bath) within 90 days recent sold. If I filter this within the same zip code, I could find one property (sold last Dec at $269K) and this property is about 1.3 miles from the subject property. However, if I use the similar approach not within the same zip code but same mile radius (1.3), I could find two properties at $410K and 390K. Both sold in April 2024. In this case, can I assume that these two properties which sold recently are more accurate values?

Got it. That additional detail helps.
So, assuming those more recent sales are considered to be in the same or similar "market area" and have similar locational appeal, than it would make sense that those would be more representative of the current Subject value, then the Dec 2023 sale.

It may be market dependent, but there are very few areas where zip code would be the defining factor in location or market area. But, some areas the zip code makes a big difference, like 90210 in Beverly Hills.
As long as the locational characteristics, including zoning, appeal, school districts, etc, are similar.

So, yes, you're argument may be reasonable.

Longtime appraiser here.  

* 2-4 unit properties are residential and mainly valued based on sales-comparison, not income. Income approach should play some role, but not major. The fact that you increased the income from $2,225 to $4,041 is great and I would think should contribute to a higher valuation, but that depends on many other factors.

* Since you didn't significantly change the condition or quality of the property, any increase in value would be due to either you paying under market value originally, or appreciation due to buyers paying more for similar properties in the area. That would be for you to research and decide.

* The value of your property is based on SIMILAR recent sales. SIMILAR means unit configuration, # of units, bed/bath count, relative unit size, garage/s, etc. It also, and VERY IMPORTANTLY means SIMILAR LOCATION/AREA. What you are describing (i.e. expanding search area to 1-2 mile radius) sounds like "shopping for higher priced sales" as opposed to looking for recent similar sales in a similar market area. In other words, it sounds like you are saying, "I want to use these sales over here, because they appear to give my property a higher value." But, that's not how values or markets work and any reasonable appraiser will not widen their search criteria just because values aren't at a certain level. Although, they may widen their search if there are a lack of similar sales in the Subject's market area.

Based on what you are saying, the properties located beyond your property's zip code and within the 1-2 miles radius, are in a higher demand market area, with greater market appeal and therefore higher values - for some reason. And, if I (an appraiser) decide I need to use comps in a different area, I should analyze the area and see if any location adjustments are necessary (i.e. are those comps in a more desirable area/location, etc,). And if those comps are determined to be in a higher demand/desirable area they would be adjusted downward for superior location and the Subject value would end up in the vicinity of the closer comps anyway.

If there are "good" comps within close proximity and within the same market area as the Subject, an appraiser is not justified to look beyond that for higher valued sales comps. But, I have also seen many "questionable" appraisals/appraisers, so it is possible that you get someone who doesn't know any better.  :)