How far back can appraisal comps go?

Twelve months is a guideline, not a brick wall

Agents ask me this all the time, usually right after an appraisal used a sale they thought was "ancient." Here is the actual rule.

Fannie Mae's Selling Guide says comparable sales that closed within the last 12 months should be used. Notice the word: should. The same section says the best and most appropriate comps may not always be the most recent sales.

You may have heard the six-month rule. It gets repeated at every broker open like a family recipe nobody wrote down. Fannie Mae's comparable sales section does not contain one. A lender or review desk may have its own preference, so ask, but don't treat six months as a Fannie Mae rule.

Fannie Mae does set a floor on quantity: at least three closed comparables in the sales comparison approach. Listings and pending sales can be used as support, but they don't count toward those three.

When an older sale is the better comp

Fannie Mae gives an example that surprises people. It says it may be appropriate to use a nine-month-old sale with a time adjustment instead of a newer sale that needs several adjustments.

That makes sense once you picture it. Say your listing is a single-story house on a cul-de-sac. The only sale last month is a two-story on a busy street with a different lot. The nearly identical house next door sold nine months ago. One adjustment for time beats a stack of adjustments for everything else.

Fannie Mae also says an older sale may be the better choice when market conditions have dried up the supply of recent sales. In rural areas, where sales are thin, the appraiser may use older sales as long as the report explains why.

That explanation is required. An older comp with no comment in the report is the appraisal version of a seller who says the roof is "newish." Maybe. Show me.

Older sales need a time adjustment the market supports

Using an older sale means answering one question: what has the market done since that house went under contract?

Fannie Mae's adjustment rules say the appraiser has to analyze market change from the date the comp went under contract to the effective date of the appraisal. Time adjustments, or the decision to make none, must be supported by evidence. The guide says home price indices are acceptable support, but other sales and contracts should back it up whenever possible. The report has to explain the adjustment either way.

Fannie Mae also warns about a trap. A market can show a positive 12-month trend while being flat or falling over the stretch that actually matters. A long average can hide a short turn.

Here is a hypothetical. A comp went under contract ten months ago. Since then, a handful of similar homes nearby sold, and several more went pending. If those newer sales and contracts show prices moved, that movement, measured, is the time adjustment. If they show nothing changed, the report should say that too, with the sales to back it. Either answer is fine. No answer is not.

This is why I read the market in real time. I test the most recent window the data can support, not a lazy 12-month average. If prices moved in the last 90 days, the time adjustment should know about it.

What I see in the field

My position is simple. An older sale can still tell you a lot if you do the work. Adjust it to the house, then carry it forward to today with a market change the data supports. What you get is an "as if it sold today" indication.

Lenders generally want recent sales on the grid, and I respect that. But an older sale of the twin house down the street, properly adjusted, is often stronger evidence than a recent sale that has nothing in common with the subject except a ZIP code.

Where it goes wrong is when an older sale gets used without a real time adjustment, or with a number pulled from thin air. If the market went up and the report doesn't say so, the older comp drags the value down. If the market fell and nobody noticed, it pushes the value up. Either way, the comp is telling the truth about the day it sold and lying about today.

Facts over feelings. The sale date matters less than whether the report proves what happened since.

What agents can do with this

1. Don't dismiss a strong older sale. If the most similar house sold 8 to 14 months ago, include it in your comp packet and say why it matches.
2. Bring the market change. Show what similar homes did since that sale: newer closed sales, pending contracts, price changes on listings. That is the evidence a time adjustment needs.
3. Watch the short window. If your market turned in the last few months, point to the recent sales that show it. A 12-month chart won't.
4. Check the report's explanation. If the appraiser used an old comp, the report should say why. If it doesn't, that is a fair question for the lender.
5. Ask the right question in a dispute. "This comp is too old" is weak. "This comp needed a time adjustment of a measured amount and got none" is a real issue.
6. Remember the three. Three closed sales are the minimum. Pendings and listings help, but they can't fill those slots.