Tips for Dealing with Complex Single Family Residential Appraisals-Page 2

What Makes a Residential Appraisal Complex?

Residential appraisals can be complex for many reasons. Some broad categories with examples include:

Highest and Best Use

  • Is the subject’s highest and best use as a single family residence, as vacant land, or as a commercial property?
  • The most dangerous issue to get wrong is highest and best use. If you get the highest and best use wrong, you can be significantly wrong on your value and leave yourself open to sanction and lawsuits.


  • What is the value of a life tenancy?
  • The subject is part of a co-housing project. What effect, if any, on the subject’s market value given that it is part of a co-housing project?

Rapidly Changing Market

  • The largest employer in the county announced yesterday that it was closing. What effect does this have on the subject’s market value?
  • An earthquake hit the area. What is the value of the subject on the day before the earthquake and the day the earthquake hit?


  • Scarcity of Sales
    • What is the current market value of the subject when the last competitive sale was 12 months ago?
    • How do you determine market direction when the overall market is non-conforming with few sales?
  • Overlapping MLS Systems
    • Need to check both MLS systems for data
    • Need to purge duplicate entries during data analysis
  • No Central Data Repository
    • What if 30% of the sales in the market are pocket listings (listings not included in the MLS but instead handled by one office)? How do you get that data? Are pocket listings truly representative of the subject’s market value?
    • How do you find SFR rental data when there is no central database of rentals?
  • Unreliable Data
    • Some areas or property types are notorious for unreliable property characteristics, complicating analysis.

Property Characteristics

  • Location
  • Lot Size
  • Over-improvement
  • Under-improvement
  • Unusual Design
  • Unusual Amenities
  • Accessory Dwellings
  • Condition
  • High Quality Design
  • Income Production
  • Lot shape/configuration


  • Death in a home
    • What is the value impact of a notorious murder in a home? Will anyone live there or is highest and best use to tear the home down?
  • Toxic waste nearby
    • What is the value impact of living near a Superfund site?


  • Private party work sometimes calls for dates of value much older than the typical residential lending assignment. How do you know the condition of the subject when your date of value is 10 years ago? How do you verify your data when the agents involved retired five years ago?
  • How do you find your data when your date of value is prior to the start of MLS in your area?

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