IAS Help Center and FAQ

How close to the subject must my comparables be?
Your active and sold comparables should be as close to the subject as possible. If the subject is in an urban area or a developed subdivision, your comps should be in the immediate area. If more than one of them is greater than 10 blocks (approximately 1 mile) from the subject, your comments must state 3 things: that you searched the immediate subject neighborhood for comps; that the comps you used were the nearest available that shares the subject’s overall market appeal; and, that the comp you used is located in a competing area that a potential buyer for the subject would also consider. In addition, you will be asked to provide the results of your MLS comp search going back 9 months and out one mile so that we can document to our clients that no closer comps were available.

What if the subject is not typical for the subdivision?
Frequently we are asked to value a new build in an old neighborhood, or a home that has been added on to or had the garage converted to living space. The best approach to choosing comps in these situations is to select at least one sale from the immediate area, adjusting for the physical differences, and one that is similar physically to the subject from a competing area. That way we can better gauge the various influences affecting the property.

When is it acceptable to go further out for comparables?
It’s acceptable to go further out for comparables when market data similar to the subject in key physical characteristics, i.e. site size, livable area, style, age and condition, is not available in the immediate area. When going outside the immediate area to find market data similar to the subject’s physical characteristics, it’s critical that you pull data only from areas that are comparable to the subject in overall locational appeal, in other words, areas that would compete with the subject area for the same buyers.

Factors to consider are proximity and access to schools, shopping and employment centers. Be sure to state in your report that “although the comparable used is not from the immediate subject area, it is similar to the subject in physical characteristics and is located in a competing area that enjoys comparable locational appeal.”

When is it acceptable to use older sales data?
Time is one of the more difficult variables to adjust for, so you should always strive to use the most recent comparable sales available. Recent market data is particularly critical in an appreciating or depreciating market.

In a stable or “flat” market, older sales may still be a good indicator of current value, but if you are relying on sales older than six months you must state in your comments that there are no more recent comparable sales available and that overall values in the area have remained stable in the time between the comp’s sale date and today. If you feel the best market data available to you may not meet this standard, contact you IAS Valuation Manager for assistance.

What should I place most weight on, Actives or Solds?
As a rule, most weight should be placed on sold comparables. There is no better indicator of current market value of the subject then a recent sale of a property comparable to it in every relevant respect. Current listings, or “actives,” have not completed the market cycle and are therefore inherently less reliable. There is an axiom worth. Be careful to not be too influenced by listing prices.

There is one exception—a depreciating market. One sign of a depreciating market is when listing prices of comparable properties are lower than recent sale prices. In this case, relying on sold comparable can lead to overestimating the subject’s current value. Actives still won’t tell what the subject is worth, but they’ll come closer than solds.

Why do you require Days on Market for actives and solds?
Days on market, or DOM, reveal a great deal about the dynamics of the subject’s real estate market. Long DOM (120+) are typical of sluggish, declining markets. Long days on market often result in large and /or multiple price reductions before sale.
Short DOM (0-60) suggest an active market where demand is greater than supply and is usually accompanied by measurable appreciation in market values. Don’t ignore days on market when analyzing the data in your report. Keep in mind that a home that sells for full price within a few days of its hitting the market may have sold for less than its market value. The seller may have underestimated the home’s value when he placed it on the market. That sale may not be an accurate market indicator for the subject. On the other hand, if a seller has to wait six months to get his price, that price may not reflect how much less he would have had to take in order to sell the property within the 90-120 days marketing time we are looking for. Long DOM for your listings is also a sign of a weakening market or suggests the listings are overpriced.

Why do you require an explanation when a sold comparable sells for more than it was listed?
Seller concessions are common in many real estate markets throughout the country. Sellers often make concessions in order to facilitate a sale to a buyer who is short of cash and who might otherwise be unable to complete the purchase. In return, the buyer will compensate the seller by offering a higher price. When a seller pays all or part of the buyer’s closing costs or loan fees, or when the seller gives the buyer a “credit” toward new carpet or the cost of replacing the roof, he is effectively reducing the sales price of the property.

Remember, our clients want to know the “cash” or “net” value of the property—the price at which the property would sell without seller concessions

How many photos do you require?
Our photo requirements vary depending on who our client is. The specific requirements for your BPO will be stated in the order email you receive. At a minimum, every BPO requires one subject photo and one street scene. In some cases you may also be asked to provide address verification in the form of a photo of he subject’s house number and a photo of the street sign. The best subject photo is one that is taken at a slight angle so that both the front and one side of the house are visible. Street scenes, in addition to showing the street itself, should reveal as much of the other homes on the street as possible.

How much weight should I place on recent sale of the subject?
There is no better comparable than the subject itself. If it has sold recently and if it appears the sale was an arm’s-length transaction, then significant weight should be given to it. Unfortunately, there are times when sales are not only not arm’s-length, but designed to defraud unsuspecting lenders. If you have any suspicions that a previous sale of the subject was something other than arm’s-length it is vital that you express and document those concerns in your report.

How much weight should I place on the current listing price of the subject?
That depends. If the subject has been recently listed, its asking price should have little bearing on your conclusion of value. On he other hand, if the subject has been on the market without selling for a length of time greater than the average marketing time in the area, then it is telling you that its value is something less—and often significantly less—than the asking price, even if your sold comparables are indicating a value at or above the listing price. There is no better or more current market indicator for the subject than the market’s reaction to it when it is offered for sale. By definition, a property can never be worth more than what you can’t sell it for.

What should I say in my comments?
In many ways, your comments are the most important part of your valuation, yes, even more important than the opinion of value itself. If you provide comprehensive comments with your market data, the market value of the subject will be self-evident. Your comments describing and explaining your data will “draw” us to your value conclusion.

Without good comments, the best market data in the world will leave us guessing. Take care not to use your comments to tell us what you have already told us. Why tell us the comparable is a 3 bedroom, 2 bath ranch on 2 acres when you’ve already filled in the data fields for number of bedrooms, number of baths, style and lot size? You’re wasting your own time and not enlightening us in the process.

Subject Comments:

Comparable Comments.
Tells us in what ways each comparable is superior to and / or inferior to the subject. Don’t forget neighborhood factors and seller concessions. If a comparable sells for more than its list price, please explain why. It is important that we know when seller concessions are included in the price, or when high demand creates bidding“wars.”

Repairs needed versus Repaired Value.
The “Repaired Values” boxes must always be filled in—even if you don’t list any needed repairs. If you do not list repairs, your Repaired Value should be the same as your As Is Value.

If you do list repairs, please make sure the spread between your As Is Value and your Repaired Value is at least as much as the amount of your Repair Estimate. If the spread between your As Is Value and your Repaired Value is not at least as much as the amount of your Repair Estimate, it’s probably because your As Is Value is too high. A prudent buyer will not pay more today than what he can sell a property for once it’s rehabbed, minus the cost to do the work. In fact, an investor will typically require an even bigger spread to compensate him for his risk.

If you rate the subject’s condition as Fair, Poor, or Damaged, a repair estimate must be provided. If you rate the subject’s condition as Good or Excellent, do not list repairs.

What is meant by Repaired and As-Is values?
“Repaired” means (regardless of client) what the property would sell for if in its highest and best condition (regardless of cost), whether it is an interior or exterior inspection. We are looking for full-market values. In other words, if price was no obstacle and we completely repaired the subject, what would the property sell for?
Then one should estimate the cost of these repairs to get the subject to top condition. One possible way to come to the as is value, is to take the repaired amount and back out the cost to repair. Current comps may not support this value, and so this should be measured against this value.

You will be held accountable for your values from initial Drive-by to REO assignment! When you get an REO that you have previously valued, we use both of these values for reconciliation. When you are providing IAS with a Drive-by value, the repaired value should be the highest price you would be able to get for the property. The repaired value should never change from drive-by to REO. That value is the highest and best value possible for the subject. The only thing that should change on your values is the as-is price in order to discount for the necessary repairs needed that were not noticed on the drive-by inspection.

How similar to the subject do my actives and solds have to be?
Locational similarity is absolutely imperative. If the comps are not from the subject neighborhood, they must be from the nearest competing neighborhood. Locational differences are almost impossible to accurately adjust for. Obviously we want a high degree of physical similarity as well. If the livable area of a comp is more than 20% larger or smaller than the subject, you will be asked to provide another comp unless you make a compelling explanation in your comments.

What are some of the most common red flags that might result in my report being rejected?

What if I can’t find the property?
First, check out www.netronline.com or www.USPS.com on the web. Also check your local post office. Keep in mind that we frequently ask you to value properties that are new or very recent construction. So even though the subject may not show up on any of your in-office resources, please make a physical inspection of the vicinity where you believe it might be to see if you can locate it. If that fails, please contact your IAS valuation manager.

Why do you sometimes ask me to match the subject’s physical characteristics to an appraisal rather than allow me to use county or MLS data?
Whenever we provide a copy of an appraisal to match the subject’s physical characteristics to, we do it at the request of our client, and your valuation will be rejected if you fail to do it. However, if you believe the appraisal to be in error, we encourage you to note that in your comments.