Verifying Comparable Sales
Are you talking to a party to the transaction on each comparable sale you use in your appraisal practice?
If the answer is no, the odds are against you that you haven’t reported some level of misleading information. There are few people in the entire universe that fully understand any given transaction, and if you do not speak to one of them you are likely going to incorrectly analyze sales in your day to day practice. No two real estate transactions are the ever the same, and there is a story behind each and every deal. It is our job as appraisers to piece together the most comprehensive understanding we possibly can, and convert that knowledge into an appropriate adjustment process.
Public records are great, and facts are undisputable, but to properly analyze a comparable sale I would argue that you need to understand the nuances of the totality of the transaction to make meaningful, accurate, warranted adjustments. Only the buyer, seller, broker, or other closely-related party can tell you the vital information you need to make appropriate adjustments.
Sometimes the verification process is more difficult than it should be, and sometimes it is impossible. But if you work at it, and make it a priority, your appraisal practice will benefit, your rolodex will grow, and your clients will thank you for a job well done.
Think about it, is there really any better satisfaction than someone using a comparable sale against you, but they didn’t verify the sale with a party to the transaction, and you did? That’s a quick conversation. Conversely, how confident are you that a sale is a true reflection of “the market” if you don’t speak to anyone?
Be confident, confirm sales, pick up the phone, talk to someone. Do it EVERY time.
Thanks for reading!