An appraiser must establish and justify neighborhood boundaries on every property appraised.
In order to establish neighborhood boundaries an appraiser may:
|•||Inspect the physical characteristics of the area|
|•||Draw tentative boundaries on a map|
|•||Test tentative boundaries against demographic data in the defined area|
Boundaries may be a natural or man-made barrier such as a river, highway, or a railroad. Zoning differences, school districts, or political differences may define the neighborhood boundary.
The boundaries established will define the area in which the neighborhood data will be gathered and from which the most reliable comparable sales may be selected.
The boundaries will also establish the desirability and marketability of the subject property relative to similar properties in nearby competing neighborhoods. In the event it becomes necessary to use comparable sales from a competing neighborhood, boundaries facilitate identification of similar neighborhoods.