Limited sales activity is common in rural markets, custom-home neighborhoods, and low-turnover areas. When comps are few, the appraiser’s task is not to find perfect matches, but to show that the selected sales are the best available indicators of value and that all departures from ideal data are well supported.
In this article, we’ll answer questions like: How far back do appraisers look for comps? How far out geographically? What other tips and tricks do appraisers use to arrive at a credible appraisal, even when comps are limited? Additionally, we’ll share some insights from appraisers who answered our survey question, “What do you do when appraisal comps are few?”
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Using the Three D’s to Expand the Search
When recent, proximate, and similar sales are unavailable, appraisers typically rely on some combination of the “Three D’s” to broaden their search for comparable property sales:
- Dated – Search for older sales within the subject neighborhood.
- Distant – Search for similar sales farther away in competing neighborhoods.
- Dissimilar – Search for dissimilar sales within the subject neighborhood by widening the parameters for improvements (GLA, age, features, etc.).
Each introduces tradeoffs, and the goal is to choose the path that best reflects buyer behavior.
Using older sales may be preferable when staying within the same market area preserves market influence. Expanding distance can be appropriate when nearby neighborhoods compete for the same buyers. Using dissimilar sales may be necessary when physical differences can be reliably adjusted with market evidence.
In every case, the appraiser must explain why the sale competes with the subject and how adjustments were derived.
How Far Back Do Appraisers Look for Comps?
Time adjustments draw scrutiny. Most agency assignments expect appraisers to use the most recent closed sales available, typically within the prior 12 months when possible.1 When older sales are used, market conditions adjustments often become central to the analysis.
Time adjustments should be supported with clear data, applied consistently, and reconciled logically. Underwriters pay close attention to whether these adjustments reflect documented market behavior rather than assumptions, particularly in shifting markets.
When comps are few, one survey respondent told us, “It has been my experience that we simply have to go back farther than 3 months, 12 months, to maybe even the past 24 months. We know the lenders will typically accept comparables older than 12 months if we explain why we are using an older sale.”
How Far Out Do Appraisers Go for Comps?
Geographic expansion should mirror the buyer pool. Agency guidance does not impose fixed distance limits. Instead, it focuses on whether comparable sales reflect the same market influence as the subject property. In rural areas, this may require expanding well beyond typical suburban distances.
Crossing boundaries such as school districts, municipal lines, or service areas can be appropriate, but these often define submarkets. When crossed, the report should clearly explain why the comparable remains competitive and how location differences were addressed.
One survey participant told us, “I normally pin the property, [then] go out a quarter mile at a time to find relevant comps.” Others said they expand their search to competing neighborhoods and/or towns when comps are sparse.
Program Considerations When Comps are Limited
Fannie Mae and Freddie Mac expect the best available closed sales, generally within the past year, with clear explanations when older, distant, or dissimilar comps are necessary.
FHA allows flexibility but often involves lender overlays that make documentation critical.
VA guidance prefers more recent sales but permits older ones when adequately supported.
USDA explicitly recognizes remote rural and low-activity markets and requires documentation of the appraiser’s efforts to locate sales and support credibility.
Strengthening Credibility Beyond the Sales Comparison Approach
When sales data is thin, appraisers often reinforce their conclusions by verifying concessions, referencing listings and pending sales for market context, and applying the cost or income approaches when appropriate. In some cases, these approaches may carry greater weight than the sales comparison approach, provided the reasoning is clearly explained.
Survey Results: Appraisers Share Their Individual Approaches
We surveyed our appraisal community to find out, “What do you do when appraisal comps are few?” The following comments show how individual appraisers often put their own spin on the “Three D’s” when expanding the search for comparable sales:
“Time and distance. My preference is to go back farther in time within the same neighborhood and/or market area and make market condition adjustments. If that still doesn’t provide enough comps, I expand the market area, looking for more recent sales with similar characteristics to the subject property.”
“First consider a broader time frame. Market conditions adjustments are very supportable.”
“Expand search to other competitive neighborhoods. Next, go back in time.”
“Expand my search step by step. First go as far in 1.5 to 2 miles in radius for comps. Second go back 180 days from time of inspection instead of 90 days. Then expand the GLA to 25%. You will find some comps.”
“Make adjustments to add or remove features, i.e., bedrooms, baths, screen porch, land.”
“When comps are few, I rethink my search criteria first. For example, an area search would be the subdivision if applicable, search 1 mile, or search school district. Second, I rethink criteria like pool, lot size, unique attributes, basement, increase year built range. Last, I rethink things like older sales, adding pending sales in addition to the three closed sales, and going farther out.”
“I will either use older sales and adjust for market conditions (increased/decreased values) OR expand the distance criteria and adjust for location (inferior/superior).”
“I live in a rural market. Comps are always few, but recently they are almost non-existent. I really prefer to stay in the same market area, and in doing so I am going back in time a lot and then determining an accurate time adjustment. I track the market every month and have good data to support the adjustments.”
“What my supervisors have taught me to do when comps are sparse (which often happens in the semi-rural area we live in) is to EXPAND THE PARAMETERS. This may mean the geographical bounds or the lot size or the improvement square footage. Secondly, find the main buyers’ motivation for the subject (i.e., there’s an ADU or a wooded view or perhaps it’s a low list price) and go into nearby competing marketplaces and find comps with that similar primary feature that would attract a similar buyer. Locational adjustments can be employed if matched pairs analysis shows that’s warranted.”
Other Tips and Tricks for When Appraisal Comps Are Few
Besides expanding the search parameters, some survey respondents shared other ideas for how to find comparable sales and arrive at a credible appraisal.
Additional tips and tricks recommended by appraisers include:
- Talk to local real estate agents
- Check tax records
- Talk to your supervisors or peers
- Look for non-realtor sales (e.g., FSBOs)
- Leverage technology
- Utilize the cost approach
- Utilize the income approach (if it’s an income-producing property)
“Tap into local knowledge. Engage with local residents and real estate professionals for insights into recent sales and property trends.”
“Check tax records to see if there are sales that haven’t been listed. Talk to local agents.”
“Ask my supervisor or other peers for guidance.”
“Look through Craigslist and local papers and websites for FSBOs, and sometimes drive an area to look for new signs on properties that have not hit the MLS, or are being held as office exclusives. Also use courthouse recorder’s office to hunt for new trust deeds and transfers.”
“Leverage technology tools specializing in rural real estate data analysis for broader data access.”
“Use the cost approach method and any other data to support the appraised value.”
“In some cases, the cost approach can be used, especially if the home is newer, where determining accrued depreciation can be more reliable than if applying to an older home.”
“When facing a scarcity of appraisal comps in Kentucky’s rural market, several strategies can be employed to navigate this challenge effectively. Firstly, expanding the search radius to nearby towns or areas can uncover additional comparable properties. Secondly, adjusting for differences between available comps and the subject property is crucial for accuracy. Moreover, considering alternative data sources like tax assessments or local insights can provide valuable information. Additionally, factoring in land value separately is essential, as it often plays a significant role in rural properties. In cases where traditional approaches fall short, utilizing the cost approach method can estimate the cost to rebuild the property.”
“Cast a big net. First, I will expand search parameters and see if any comparable sales with features slightly outside the initial search parameters were being filtered out. Then, I like to look back at older sales within the subject market area to see if anything comparable has sold within the previous few years. At that point, if comparable sales are extremely limited, it is time to pivot to the cost and income approaches to value.”
“Get creative! First, I may go back in time, resulting in a change/adjustment in market conditions. Next, if the subject property is complex, an appraiser may identify attributes that may appeal to a specific buyer and ‘cast the net wide’ in that marketing area. It is all about bracketing and supporting adjustments through the demonstration in the marketplace. I love those tricky properties that really cause me to think outside of the proverbial box! Have fun with it!”
Bottom Line
When comparable sales are limited, credibility comes from sound judgment, strong market support, and clear explanation. Expanding search parameters is expected in many markets. What matters most is showing that the selected data reflects buyer behavior and that the analysis is transparent, logical, and defensible.
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