For sale by owner Sales are used infrequently by appraisers these days and Fannie Mae has indicated that they will not allow appraisers to use For Sale By Owner sales as comps. Not sure of the current status on this, but here is the reasoning.
1. For Sale by owner sales leave many things unanswered. We will not know the condition of the home, the terms of the sale, if there were any unusual financing terms, etc. Unless we can track down the seller or buyer involved in the transaction, these items are unknown and if we can track down the seller or buyer, we must TRUST that the information we are provided by the seller and/or buyer is indeed accurate.
2. With Realtor based sales in FMLS/MLS, we have photos, terms of sale, a contact person (Listing and/or Selling Realtor who is not financially tied to the transaction) to obtain the important information we need regarding the sale.
3. With a For Sale By Owner deal, we also will not know the relationship between the buyer and the seller, it could be a NON ARMS legnth transaction, which we would not use as this type of sale is not a Market Value sale by definition.
So if you want to provide appraisers with For Sale By Owner deals, there is a good chance they will not be able to be used in the report, without substantial investigation into these sales.
Thanks Folks!
Mary Thompeon
www.marytappraisals.com
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