Do comps have to be located within one mile of a property to be considered legitimate in the eyes of a lender? Does Fannie Mae really have a “one mile” standard? This is sometimes a point of confusion among real estate professionals, so it’s important to know the answer. As a Sacramento real estate appraiser, it’s vital to understand standards like this and of course use the best comps out there in my appraisal reports (whether inside or outside of a mile radius). Watch the video below (or here).
What do you think makes a good comp?
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When you think of certain neighborhoods in the Sacramento area, what comes to mind when hearing about Oak Park, The Fab 40s, Empire Ranch, Del Paso Heights or Granite Bay? In laymen’s terms some might categorize particular areas as desirable or undesirable, rich or poor, or ultimately good or bad. But descriptions like this will quickly send appraisers to Fannie Mae’s naughty list.
Fannie Mae is determined to ensure appraisers stay objective about the criteria they use to describe and value property. Appraisers need to not let their personal opinions, beliefs or subjective judgements about certain neighborhoods influence the content or outcome of an appraisal. In addition to the above terminology, appraisal forms designed by Fannie Mae state on the first page that “race and racial composition are not appraisal factors.”