When determining the worth of a property appraisers use comparable sales to determine its value. These comparable sales (also known as “comps”) provide a standard for establishing a property’s fair market value.
A common question is when appraisers will consider comparable sales. This blog post will explore the timeframes that appraisers usually consider when evaluating comparables sales and shed light upon the factors that influence their decision.
Recent Sales as a Primary Focus
When choosing comparable properties, appraisers usually prioritize recent sales. The rationale for this approach is that the most recent sales reflect current market conditions best.
Recent sales data is a valuable tool in a real estate market that is constantly changing. It can give you valuable insight into pricing trends, buyer preferences and other important factors. Appraisers tend to focus on sales comparables that occurred within the last 3 to 6 months.
Adjustments for Market conditions
Although appraisers prefer to use recent sales, they understand that not all properties have comparable sales within a desired timeframe. In these cases, appraisers will consider sales from a longer period of time, but they must also adjust for market conditions.
Appraisers make adjustments based on changes in property values that have occurred since the older transactions. These adjustments are made to ensure that comparable sales reflect current market conditions.
Property Types and Location
The timeframe in which comparable sales are considered can vary depending on location and type of property. Appraisers in areas where there is a lot of market activity may focus more on recent sales.
Appraisers may also need to extend timeframes in areas where the market is slower. They might consider sales that have been sold for six months, a year, or even longer. The property type is also important, as certain types of properties may have longer sales periods or fewer sales, requiring the consideration older comparable sales.
Appraiser’s judgment and Market knowledge
Appraisers rely heavily on their professional judgement and market knowledge when determining the appropriate timeframe to compare comparable sales.
A number of factors are taken into consideration, including the stability of local real estate markets, the availability and uniqueness the property. Appraisers use the knowledge and expertise of the local market in order to determine the relevance and timeframe of different comparable sales.
Historical Market Data in Context
In some cases appraisers will use historical market data as a way to add context and support the valuation.
By analyzing historical market trends, appraisers gain insights into how values have changed over time. This historical perspective will help appraisers make informed decisions about the value of property.
Conclusion
While recent sales are the main focus, the timeframe to consider comparable sales can depend on various factors, such as market conditions and property type, location and the appraiser’s judgment. Appraisers choose comparable sales that are the most accurate representations for the property’s value. By analyzing sales data from recent months and making adjustments, appraisers can ensure that the valuation they provide reflects market conditions.
Understanding the timeframe that appraisers take into account for comparable sales is a valuable way to gain insight into the appraisal and set realistic expectations. Working with an appraiser that is knowledgeable about the local market will help you get a true appraisal of the property.