A house can be straightforward to describe and difficult to compare. It may sit on a large rural parcel, have an unusual floor plan, or belong to a market where very few homes have sold recently. The challenge is finding enough relevant evidence to explain what buyers would pay for that particular property.
Limited sales do not automatically make an appraisal impossible. They do mean the assignment needs room for careful research and a clear explanation of the evidence used.
A nearby sale is not always a good comparison
Distance is easy to measure. Similarity takes more judgment. A house a few streets away may serve a different market because of its size, condition, access or land use. Another property farther away may compete more directly for the same buyers.
Fannie Mae’s comparable-sales guidance recognizes that the best available sales can sometimes come from competing areas or, for rural properties, considerable distances away. The appraiser needs to explain the selection and account for relevant differences. [1]
The useful question is whether the selected sales help explain this property’s market, and whether the report makes that connection understandable.
Scarce data changes the work
In a subdivision with frequent sales, an appraiser may find a strong set of comparisons relatively quickly. An uncommon property can require more time to locate records, verify details and understand how buyers respond to its features.
For a lender, it helps to flag those features before placing the order. An unusual property described as an ordinary home may need its assignment details revisited after the work begins. That can affect the proposed fee, schedule or information request.
An initial conversation should cover what makes the property different, what information is already available and whether the proposed appraiser has relevant experience. Fannie Mae’s selection criteria emphasize property and market knowledge for assignments subject to its requirements. [2]
Information worth providing early
Start with the facts that would be difficult to discover from a basic address search:
A description of unusual construction, layout or substantial additions.
Parcel information, access arrangements and available surveys.
The purchase contract and relevant listing information, where applicable.
Records explaining renovations or changes in use.
Any known discrepancy between public records and the property’s current configuration.
Relevant sales information can also be helpful. Identify its source and explain why you think the property is comparable. Treat it as information for consideration, rather than a requested conclusion.
What a useful explanation looks like
A report should help its reader understand the challenge. Which features made comparisons difficult? Why were these sales selected? What differences matter? How does the evidence support the conclusion?
If that connection is unclear, a specific question is more productive than a general request to “find better comps.” For example: “Please explain how the selected sales reflect demand for the subject’s acreage.” That identifies the issue without asking for a particular value.
Start with the property
When sales are limited, the best preparation is a clear description of the property and enough information to plan the work. Share the unusual features early and ask what else is needed before agreeing on a schedule.
Explore complex property appraisals.
Sources: 1. Fannie Mae Selling Guide: Comparable Sales. 2. Fannie Mae Selling Guide: Appraiser Selection Criteria.
General educational information. Requirements depend on the assignment and loan program; this article does not determine a property’s value or eligibility.
