When is use of the Sales Comparison approach required?

The sales comparison approach is required for all appraisals.  The appraiser must
•     present the data, points of comparison, and analysis;
•     provide support for the Appraiser’s choice of comparable properties, and the adjustments for dissimilarities to the subject; and 
•     include sufficient description and explanation to support the facts, analyses and the appraiser’s conclusion. 

If the data from the market area is insufficient to support some of these requirements, the appraiser must provide the best information available and include an explanation of the issue, the data available, the conclusions reached and the steps taken by the appraiser to attempt to meet the guidelines. 

For additional information see Handbook 4000.1 II.D.4.c.iii(E)(3)  at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04041