Jan 12, 2017 - 05:26 AM
Question: Is it a violation of USPAP to use a recent sale of the subject property as a comparable in the sales comparison approach to value?
Response: No. Standards Rule 1-4, states:
In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results.
(a) When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion.
Additionally, Standards Rule 1-5(b), states:
When the value opinion to be developed is market value, an appraiser must, if such information is available to the appraiser in the normal course of business:
(b) analyze all sales of the subject property that occurred within the three (3) years prior to the effective date of the appraisal.
Therefore, not only could the subject property potentially be used as a comparable sale, but an analysis of the prior sale must be made in accordance with Standards Rule 1-5 if it occurred within the prior three years. However, appraisers are cautioned to be aware of possible assignment conditions that require minimum numbers of comparable sales to be reported in addition to the sale of the subject property.