I was trained in the wisdom that there are always comparables, perhaps not perfect or as similar as you (or the underwriter) would like, but there are still always comps. After more than 25 years of appraising, I recently completed my first assignment where there were no comparable closed sales.
The property was a REO vacant canal-front site on a small lake in northeast Michigan. As a REO property, the prospective listing Realtor had already completed a BPO. Unfortunately, BPOs are not evaluated to the same standards that appraisals are. Within a 5 county area, there are few lakes which have canal developments to provide additional lake access so no sales of vacant canal-front sites exist during the past 24 months. With no comps available, the agent used a riverfront property and two vacant acreage sales with no water frontage to establish the value. None of these are comparable sales since they appeal to totally different buying markets. Without a doubt, she picked a price and found sales to support it.
After searching 8 counties, I found no comparable sales over the past 24 month period, but three listed canal frontage sites and several developed canal front sales with cottages or homes. I then developed the report using the three vacant canal frontage listings with a list-sale ratio adjustment based upon local market research.
The AMC rejected the report and, after several hours of explaining to the lowling who answers their phone and reviewing the "comps" used in the BPO which I determined to have no relevence to subject value, I was passed on to the AMC's chief appraiser. Again, extensive detailing the market and the lack of comparable sales with only improved sales, the chief appraiser agreed that the approach completed was valid but unacceptable to their client. He further agreed the only alternative approach would be to develop a narrative report at far greater expense in which developed sales would be used with the value of the improvements removed to leave the site value. He was going to contact the lender for fee approval.
The next day I received an e-mail from the lowling that, since I did not complete the report to their requirements, it was cancelled with no payment due. Next stop, small claims court after my remaining decision - Judge Joe or Judge Judy?
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