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Why are neighborhood boundaries so important? Simply put, the concept is one of influence. Whatever influences value is the subject’s neighborhood will also influence the subject’s marketability. They will also influence the subject’s market value. And an appraisal is all about market value, right? It is important, though, to remember that market value does not exist by itself. Market value is the result of a combination of factors. One of those factors is the risk of investing in a neighborhood. We help the GSEs to measure that risk. How? By informing them about what influences marketability and value in that neighborhood.
Want a deeper understanding of neighborhood boundaries and the value influencers in them? This podcast will help! While USPAP does not use the word neighborhood anymore, It expects to see an analysis of supply and demand factors. This is part of SR1-3, USPAP’s Market Analysis and Highest and Best Use standard. Why (or why not) are buyers demanding housing in a particular neighborhood? Are builders meeting that demand? Why or why not?
Do you know what Fannie Mae looks for in your neighborhood analysis? This ebook will help you understand! Need some help with adjustments? Click here to get it! Thanks for listening!
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