Often times, Short sales data and bank owned sales data were not used by appraisers to value non-distressed properties. The reason being, the motivation of the sellers in a short sale situation was atypical and the condition of bank owned properties were generally atypical.
A recent paper issued by the Appraisal Institute has surely changed that rationale.
The Institute points out that where the concentration of short sales and bank owneds is high enough to be a significant portion of sales and/or acknowledging these sales is necessary to arrive at a realistic valuation of a property then they should be used as comparables.
Click here to view the Keeping Matter Current blog. It provides a great recap of the Appraisal Institute's findings and previous posts on the subject matter:
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