The unstable real estate market over the past several years has
posed many appraisal challenges. In particular, low purchase prices
— often resulting from "distressed" sales —
and a relatively small number of transactions in some markets can
make it difficult for appraisers to locate comparable transactions
(or comps), a critical element in many valuations. Even in areas
where prices have begun to recover, a still-low volume of sales can
mean few comps. Qualified appraisers, however, do have ways of
dealing with such situations.
The Role of Comparables
Appraisers often use the sales comparison approach to reach a
market value for a subject property. The Appraisal
Institute defines market value as "the most probable price
that the specified property interest should sell for in a
competitive market after a reasonable exposure time, as of a
specified date, in cash, or in terms equivalent to cash, under all
conditions requisite to a fair sale, with the buyer and seller
