Use of Non-MLS Sales in Appraisal Reports
Updated: Feb 10, 2020
The multiple listing service is the primary search vehicle that is utilized by most residential appraisers, but the use of sales that are not in MLS is another option that is available. Any comparable sale must be confirmed, and for this reason use of public records sales is usually less common. In this article we suggest how a seller or listing agent might increase the chances of a public record sale ending up in the appraiser's report.
We recommend that you try to research the terms of sale if possible. The appraiser will need to confirm if the deed transfer you have found is truly an "Arm's Length Sale". Simply providing a transfer public record (without having anything else to back it up) will probably not result in it's use in the report. Although I personally would research a public record sale that was pointed out to me by an agent, many appraisers are not going to take the time necessary to obtain the detail needed to rely on it.
As a Realtor, when I present one of these sales to an appraiser, I will have already confirmed the seller and/or buyer contact information. In this way the appraiser has a convenient unbiased source to confirm terms. There have been many times that I have knocked on a door for several days in order to interview the buyer of a recent sale.
If it is a critical comparable that you really want it to be used in the report, you can also try to obtain a copy of the contract that was used or closing documentation. If you have an email address for one of the parties involved you can try to have them send you any salient details about the transaction, the property, the renovation level, and any special circumstances. An email printed out and handed to the appraiser will usually have more weight than giving them a phone number and hearsay
Why must a sale be confirmed in this way?
In the past we have seen situations where a sale included a trade involving additional property (a condo flat in France, boats, furnishings, etc). We have seen appraisal reports that utilized a public record sale, which we eventually discovered was from one family member to another (not arm's length) despite the two parties having different last names. There are multiple requirements that the appraiser must comply with related to confirming sales.
Given the time constraints of the appraisal process, it is very helpful if you can take the time to track down good contact information before the day that the appraiser visits the house. As an appraiser I can knock on a door for several days trying to catch the owner at home, but at some point, the file needs to be handed in and we run out of time. It is also true that in today's business model, many appraisers are traveling a significant distance to visit the property, and they might not be able to swing back by repetitively. On the other hand your seller often lives in the neighborhood and can simply stop randomly a few times with comparatively little effort.
Transactional Data & Property Characteristic Data
Transactional data refers to the details of the terms of the sale. Property characteristic data includes other important salient details about the physical characteristics of the home such as the current condition, renovation levels, accurate living area, etc. Both transactional data and property characteristic confirmed information is required for a comparable sale to be considered reliable.
The Appraisal Foundation has some good related information here document.
We hope you have found this article to be helpful. Experienced Appraisers Inc provides private appraisal services throughout the entire State of Florida. We have local appraisers that can handle commercial, residential, industrial, and special use properties. Please consider using our company for your next pre-listing appraisal, cash purchase, tax, litigation or special use need.