There are various reasons it would be necessary for an appraiser to do this. Sometimes there are recent sales close to the property being appraised, however they are not similar properties.
A sale does not equal a Comparable.
You could have a house next door to the Subject that sold the week prior, but would not be used as a Comp because it’s a different design with large variances in GLA, condition and amenities.
Often times in rural areas there is low market activity with a shortage of sales available, so the appraiser must search further in distance to locate sales of similar properties.
Another reason would be if the property is unique to the area. There may be a very active market with lots of recent sales, but the only sales of geodesic domes with in-law suites are 18 miles away.
This is where the appraiser’s knowledge of the market area comes into play and is crucial.
Reasons for using distant comps:
- No similar properties nearby
- Low market activity – rural/remote locations
- Unique property
Appraiser must be knowledgeable of the area!