Results of Comps Grid Placement Survey
Weighting Process & Gridding of Comparable Sales
Couple of weeks ago, I sent out a survey to NW WA State appraisers asking how they organize the comps grid page(s) on completed reports. Of the appraisers emailed, approximately 10% responded. Thank you.
I did a limited distribution to keep my compiling time to a minimum, but I wanted to share the results with appraisers across the country as an FYI.
I also sent a similar query to review appraisers I know.
I offered 6 possible ways to do the grid, but as often happens, several appraisers wrote back saying they did it differently than what I proposed. I recorded those comments, and have added those to the survey.
~ Comps are positioned by most recent sale date as Comp 1, then entering by date to the oldest sale date – regardless of price: 59.3%
~ Comps are positioned by % weighting determined by the on-board process in the report software – with the highest weighted as Comp 1**: 22.2% (** this was the ‘write-in’ vote)
~ Comps are positioned by low price as Comp 1, then entering by price in turn to the highest sale price – regardless of sale date: 18.5%
~ The review appraiser who responded stated the % weighting process was preferred.
I admit to being ‘stuck in a rut’ for a long time, doing reports in ways that are comfortable to me. But this simple survey showed me that I may want to re-think my comps gridding process.
Per USPAP, the GSE’s, FHA, VA, and other clients, appraisers are expected to reveal (describe or state) in the report why one or more comp was selected as the highest or most probable indicator of value, or the reasoning for selecting the Opinion of Market Value (OMV).
It seems reasonable to me that the % weighting process, using the highest weighted in comp position 1, with the others following in turn is a logical way to organize the grid. That is corroborated by at least one review appraiser who looks at dozens of reports daily.
I know one of the report software programs has this weight observation process built in, and I think the others do also. So it’s relatively easy to determine which comp, and which additional comps, would be the best representative of the appraiser’s ultimate Opinion of Market Value – if % weighting is considered to be reasonable. And then put them into the grid in weighted order.
For those who may not know, the built-in weighting process (in my software – and perhaps the others) is calculated based on the GROSS ADJUSTMENT percentage – not NET. The comp with the LOWEST gross adjustment percentage has the HIGHEST weighting. That’s why most clients and lenders want this percentage figure included on report grids, so that they can quickly see how that compares to what you report as the OMV.
I should note here that, except for UAD and certain FHA statements, there is NO uniform way parts of appraisal reports have to be organized and written. That is certainly evident when I get a chance to ‘observe’ completed reports informally, and per actual review assignments. Knowing this, it might be prudent for more appraisers to standardize how the comps grid is organized.
While the grid organized by the ‘sale date’ of the comps is indicated above as the most often used process, that date order may not produce the same result as the % weighting process. And it may make reports harder for clients to review.
I realize your ‘mileage may vary’ about this. But if so, consider if you are ‘stuck in a rut’ like I have been! And really think about how your reports look to others upstream from your office.
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I just sent the following questions out to 11 underwriters, SAR’s,. and Review Appraisers. I’ll post the results in a week.
When Reviewing appraisals, if there a particular order in which you would like to have the Comps arranged on the Sales Comparison Grid?
1.) Most recent closed to oldest. Then Pending Sales, Then Listings?
2.) By Sales Price with Lowest to Highest or Highest to Lowest with Pendings and Listings the same way.
3.) By Adjusted Values from Lowest to Highest or Highest to Lowest with Pendings and Listings the same way.
4.) Weighted% with the lowest GROSS % adjustment weighted Comp as #1 and the highest GROSS % adjustment weighted Comp as the last, including listings and pending sales. Some pending sales tend to have the least amount of adjustments and could be placed as Comp #1.
5.) Other….??????? Please explain.
By selecting any mechanical or fixed method, you’re doing it wrong. You need to be flexible like an appraiser ninja, picking them on the fly and stacking them for front page bracketing of all or at least as many key comparison features as possible.
Comps importing and data import mapping simply does not work as well as the manual methods. For some scenarios I don’t want normal data entry, so I tag in the unique data entry as I see fit. I’ve never once seen an excell import, data map, or comps sharing program which can effectively match the logical manual methods. If you want to keep the human in human appraising, you can’t outsource your duties to automation or mechanical methods. There is no proper mechanical method which works properly in all scenarios. Mechanical methods are a clear sign the appraiser is not being flexible to the scenario at hand.