Know Thy Market- The Importance of Geographic Competence in Appraising Real Estate

Geographic competence in appraising has become a hot topic over the last couple of years. It refers to an appraisers knowledge of a market and his/her ability to produce an accurate and reliable report. One way to measure this is by looking at someones experience of  working in an area. Take a look below at the map I put together. It shows the work I have performed in the Birmingham, Alabama area over the past several years. I have been appraising for over 20 years, with 17 of those  years being in the Birmingham area. I only included the last  several years because before that my records were in a format that was more difficult to export into this program.

View Tom Horn’s Geographic Competency Map in a full screen map

Let me fill you in on why this is such an important topic in today’s crazy real estate market. In the last several years, due to the slowdown in home sales and refinances, most appraisers business has decreased significantly from what it once was. This has resulted in appraisers expanding their coverage areas to some locations where they have not previously done appraisal work in, and that they are not knowledgeable about. It is very important for an appraiser to have knowledge and experience in the areas that they work because real estate markets are location specific. For example, there are areas in the Birmingham metro area that have unique characteristics that make it necessary to choose sales comparables from directly within the immediate area. In some areas school systems are big determining factors that drive prices, however in this area just because a sale is in the same school system, does not mean it should be used as a comparable. If an appraiser comes in from out of town they may not know this and incorrectly choose a sale that is not appropriate, so knowledge of the market is paramount.

Another important thing for appraisers to have is accurate and reliable sales data to use in their appraisals. An appraisal is only as accurate as the data within it. In the Birmingham market the main sources of data include the Birmingham MLS system, AGDA, and county records. I wrote about AGDA in a post titled “What Is A.G.D.A. And Why Is It Important?, and you can read more about it there. If an appraiser does not always do work in an area they may not subscribe to local data sources because it can be expensive, but it is important to have this information if you want accurate appraisals. The Birmingham MLS system does not typically include the square footage of homes, and county records is not that accurate.

The combination of local knowledge and precise data can mean the difference in getting an accurate appraisal compared to one that is not worth the paper it is written on because it is full of inaccurate sales data and lacks knowledge of the local market. Have you had problems with appraisals being performed by out of town appraisers not familiar with the market? Drop me a line below to tell me your story, I would like to hear from you.

If you would like to learn more about Batchgeo, which was used to create the map shown above, check out fellow appraiser Bryan Mcdonald’s REBliss website.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.


  1. I beg to differ with you on this issue. When you first started, you didn’t have any experience in all of the areas you now cover. But when someone called you to do an appraisal in a new area, you accepted the assignment because you had the skill and experience from the past to pull from in order to pull comparables and complete the assignment in a manner that was acceptable to the party that asked you to complete the assignment. Mind you, I have no experience appraising property in Alabama but I bet I could take my 20 years of appraisal experience and complete an assignment in any area you are familiar with or better yet, we both go to an area that neither are familiar with and come up with a value within 5% of each other. Just my thoughts on the matter.

    • Bill, I have no doubt that you would take the necessary steps to complete the assignment in a competent manner, and there are others that may also. My problem is with the appraiser that comes in and DOES NOT do what they should. They may not spend the necessary time learning about the neighborhood or area the home is in. This takes time, especially if you are unfamiliar with the market. Lenders have shortened their turn time requirements for appraisers, which does not give the appraiser the luxury of time. I know this first hand because I have spoken to real estate agents about out of town appraisers using sales from non similar areas. In addition, the appraiser obviously did not belong to the local MLS because they asked the agent for all the sales information. This is just my experience, yours may be different.

  2. Great map, Tom. It’s a good tool to help prospective clients see you have indeed appraised in their neighborhood.


  1. […] unique characteristics. To obtain precise and reliable appraisals, consider hiring an appraiser who sepcializes in the area your home is located in. Local specialists are intimately familiar with factors that influence property values, such as […]

  2. […] to use appraiser that may be based out of state, and when they do we continue to see problems with geographic competency. I’m not saying that out of state companies cannot do a good job but I have seen many […]

  3. […] The bottom line is that you should make sure that the sales comps you are looking at are very similar to your own home. If your home is a one and a half story home with finished basement then try and find similar sales with like features. I wrote an article “What is bracketing and why should Realtors do it” that explains the process appraisers go through that goes hand in hand with what I am writing about here. So to finally answer the question asked about at the beginning I would say that the price per square foot can be a very good indicator of market value if the comparable sales are very similar to your own, and you are comparing apples to apples. If the property you are getting the price per square foot from has a pool, when yours doesn’t, or is on 5 acres when yours is on a half acre lot, then you are comparing apples to oranges and the price per square foot IS NOT a good indicator of market value. Does this make sense? If you have any questions I would be happy to answer them for you, just leave a message at the bottom, I look forward to hearing from you. […]

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