How old can an appraisal comp be?

appraisal compCan’t find a good appraisal comp?

A concern I often get from real estate agents is that there are no comps to price their listings. After I start discussing the situation with them and talking it through, it turns out that there are comps but you have to know where to look. Today I thought I would share with you the process I go through in the hope that you can use it to help price your listings. If you have anything else to add please leave a comment below.

The best place to look for an appraisal comp

I think the first concern many agents express is that there are no comps in the neighborhood. I’ll preface this by saying that the immediate neighborhood is the BEST place to start looking for comps because they will typically give you the best indication of value if the properties are truly comparable. You, of course, would not want to use a sale as a comp that was twice as big as your home just because it is next door and sold last week. You need to ask yourself if the sale is a comp or just a sale, there is a difference you know.

You always want to use the most recent sales, however, there have been some misunderstandings in the past regarding how old the comps can be. Fannie Mae requests that sales be within 12 months, however in addition to Fannie Mae requirements appraisers must adhere to bank imposed guidelines as well, which typically call for newer sales.

The first step that I take is to look for comparable properties that have sold within the immediate subdivision in the past 90 days. Using the most recent sales will provide the best indication of what is happening in the current economic climate and will probably not require a time adjustment.

A time adjustment could be warranted if something happened since the sale that caused property values to change. The closing of a large employer is an example of this type of situation. If a lot of employees have to move due to loss of work then housing inventory increases and motivations could result in sellers asking for below market value in order to sell fast. While this does not happen often it is something to be aware of.

If no sales have occurred within the past 90 days I will start looking in nearby competing neighborhoods. A competing neighborhood is one that a potential buyer would look in if there were no homes for sale in the neighborhood you’re selling in. They will have homes that are similar in age, quality, and style as well as be in the same or similar school system.

If your buyer is looking for a home in the $150,000-$175,000 price range and they want it to be on a small garden home sized lot then a neighborhood with homes in the $250,000-$300,000 range and on one acre lots will not be a competing neighborhood. Even though this neighborhood is next to yours it is not considered similar. In this situation, it is better to go a little further away to find a comparable neighborhood.

Speaking of the distance of comparables, it is my opinion that it would be better to go a little further away to find the most recent sales as long as the criteria I previously mentioned has been met. The comparability of the neighborhood is more important than the distance because proximity is not the most important factor.

After looking for the most recent sales in the subject subdivision and other competing neighborhoods you should start looking for older sales. I start expanding the time of sale by 30-day increments until I have found adequate comparables to use in my appraisal.

Even though you may have enough newer sales, looking at the older ones can give us some context to go on. They can show us if the prices are increasing, decreasing, or stable and this can help in a pricing strategy.

Active/pending sales vs. closed sales

The last thing I would like to mention when discussing how old appraisal comps should be is active and pending sales. Active listings can be all over the board so they need to be looked at really closely, taking into consideration how long they’ve been listed and how many price reductions have occurred. Including an obviously overpriced listing to show “how high the market is” cannot be beneficial because it gives an overly optimistic picture of what a house can be sold for.

On the other hand, taking a close look at pending sales can provide some of the most current information for what a similar home could sell for. All pending sales are not created equal, though. A pending sale that went under contract last night is not the same as one that has been appraised, financing approved, and just waiting to close. The later has “passed the test” so to speak and can provide one of the best indications of value along with the other recent closed sales.

As you can see, there is a lot more to consider when asking how old can an appraisal comp be. While you do want the most recent sales it is not the only criteria you should be concerned with.


Do you have other questions about how old an appraisal comp can be? I’d love to hear from you, so leave a comment below. As always, thanks for reading.

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  1. My question is, if I have a house to list that is 20 years old in a newer neighborhood off of one that is about 30-40 years old. It is a 1.5 story on a full basement. There are newer homes being built up the road (split foyers about 900 sf smaller). If you look at a map, this huge neighborhood has only one main road that leads to it. But off the backside of the community that is accessed by driving about 3-5 miles around to get to it even though it is about .2 of a mile over, is similar homes of similar age. Think large “U” shape with one neighborhood on one end of the “U” and the other at the other end of the “U”. Would an appraiser use each neighborhood even if you have to drive a few miles from one to the other but as the crow flies you just go over a few trees. Same school system. Would love to know.

    • When an appraiser calculates the distance to a comp it is “as the crow flies” like you said. If everything is similar about the neighborhoods like quality of homes, lot sizes, home sizes, etc. then I would think it should be perfectly alright to pull comps from the neighborhood.

  2. Thanks Tom. It seems like Fannie Mae is open to much older sales if needed, though FHA is very strict about a 12-month rule. That has been my experience. I would be curious to hear from any other appraisers.

    • Yeah, I agree Ryan. FHA does seem to be more strict. Thanks for pointing that out.

      • I have not done an FHA appraisal in a while, but I thought FHA was a two year rule and that there had to be a certain number of comparable sales from within one year. I will often use comparable sales over one year, particularly if I think a stronger adjustment can be made or quantified for time rather than trying to support adjustments for complex issues or subjective factors like condition or quality.

        • Great points Gary. While generally speaking the most recent sales usually give the best indication of value there are instances when using older sales can provide a better indication of value.

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