How Appraisers Choose Comps — And What They Get Wrong

The first time I read through an appraisal report, the comp section confused me. Three houses, all different from the subject property in ways I did not fully understand. I kept thinking: why those three? Who decides?

The answer is the appraiser. And the process of choosing comps is where a lot of valuation errors begin.

The Basic Rules

Appraisers follow USPAP standards and Fannie Mae guidelines when selecting comparable sales. The general expectation is that comps should be similar in location, size, age, condition, and features. They should have sold recently, ideally within the past 90 days. They should be within a reasonable geographic distance, usually within a mile for urban areas.

But these are guidelines, not strict formulas. Appraisers use judgment. And judgment can be wrong.

Where Appraisers Go Wrong

The most common mistake is choosing comps that are geographically close but functionally different. A house two blocks away might be in a different school district, on a different street type, or in a different condition class. Proximity alone does not make a good comp.

Another common problem is ignoring newer sales in favor of older ones. If three homes sold at higher prices last month but the appraiser used sales from eight months ago, the valuation will lag behind the current market. Fannie Mae guidance says to prioritize recency when recent sales are available.

Appraisers also sometimes miss renovated sales. If your home has a new kitchen and the comps do not, the adjustments need to reflect that. If the appraiser uses outdated comps and does not make meaningful adjustments for your upgrades, the final value will be lower than it should be.

How to Spot a Bad Comp

Pull up the comps the appraiser used and look them up yourself. Check the square footage, the bedroom and bathroom count, the lot size, and the sale date. Compare those to your home. Then ask yourself: is this really a similar property?

If you see a comp that is 400 square feet smaller, has one fewer bathroom, and sold seven months ago, that is worth questioning. Especially if there are more recent sales of more similar homes that the appraiser did not use.

What You Can Do About It

If you find better comps, you can include them in a reconsideration of value request. Pull the sale price, the sale date, the address, and the basic characteristics of each home. Write a short explanation of why these comps are more relevant than the ones the appraiser chose.

You do not need to be a real estate expert. You need to be specific and factual. The appraiser is required to address the comps you provide in writing.

WorthMore.ai can help you identify which comps the appraiser missed and put together a clear ROV. It does the research work that took me hours the first time I went through this process on my own.