COMPS BASED ON CURRENT FORECLOSURES

Real estate appraisals base their values on three comparable homes that have sold within 6 miles in the past 6 months. They are supposed to use only comps that are similar to the subject property, if available. Since many of today's recent sales have been foreclosures and short sales (distress sales), they are using listings which were foreclosures and short sales. When a buyer is purchasing a foreclosure it is reasonable to assume that an appraiser will use other distress sale properties for comps. However, what isn't right is when they are using distress sale comps on existing homes where there is no distress sale. Using distress sale comps on normal seller to buyer transactions only brings the prices of homes down further. The appraisers need to make sure that they use only appropriate comps even if they have to go farther distances and further in time of closings.