9-11. COLLECTING AND DOCUMENTING DATA ON COMPARABLE UNITS

This section provides guidance on collecting and reporting data on comparables.

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• A. Collecting Data on Comparables. For each relevant unit type at the comparable project, the RCS appraiser must collect data on the elements listed in Parts A through E of the Rent Comparability Grid (Form HUD-92273-S8) and on any other characteristics that would affect the rent a tenant would pay. The RCS appraiser must also identify any services that are provided to tenants, and whether they are included in the rent or incidental (using the criteria in paragraph 9-2.C). If the comparable is located outside of the subject’s market area, the RCS appraiser must provide the market data requested in Paragraph 2b, below. The RCS appraiser must verify and collect relevant data on comparables using the guidance below.

  1. Verification of Data. The RCS appraiser must exercise due diligence to independently verify any information on a comparable pulled from existing files, Internet research, newspaper ads or apartment guides. The RCS appraiser may use multiple sources if needed to adequately verify a comparable’s data.

  2. Data on a Comparable’s Characteristics. The RCS appraiser must:

     • a. View each comparable’s grounds and exterior common areas. If access is given, the RCS appraiser should also view interior common areas (e.g., lobby, laundry rooms, community or dining rooms, recreation/ fitness areas, business centers). The RCS appraiser must take color photos of each comparable’s exterior, showing location on the site and exterior design and condition.

     • b. Collect market-based data to compare economic indicators and rent levels in the two markets if the comparable project is in a different market area than the subject.

     • c. Obtain the unit’s rentable interior square footage, either through inspection or through other sources. The RCS appraiser must exclude balconies, mechanical areas, and other non-living spaces. If the square footage available represents an exterior measurement, the RCS appraiser must use professional judgment to convert the square footage to an interior measurement that can be compared with the interior measurements Section 9-9 requires on the subject. Square footage calculations should be verified with the project’s management agent, when possible.

Note: The RCS appraiser is not required to inspect a comparable’s unit interiors but should do so if a unit is available and access is given.

• d. Talk with management of the comparable property to determine overall occupancy rates for that project, typical and current occupancy levels specific to the unit types used as a comparable, and whether any unit type is particularly difficult to rent. If the comparable’s occupancy rate for a unit type included in the RCS is not typical of the comparable’s market, the RCS appraiser must determine and document why. The RCS appraiser must consider if the rent is too high or if there are other factors causing the vacancy. Also, the RCS appraiser must confirm and quantify the existence/absence of any rent or use restrictions and tenant subsidies.

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Note: If the contact person does not provide the unit size or other required information, the RCS appraiser must try to obtain the data from other sources. The RCS appraiser must use professional judgment to determine if the data is sufficient to justify using the unit as a comparable. (Section 9- 11.B.3 requires disclosure of data limitations.)

3. Data on Comparable’s Amenities. The RCS appraiser must identify services and amenities available at each comparable.

   • a. Non-Shelter Services. RCS appraisers must determine if the comparable provides non-shelter services (e.g., service coordination, neighborhood networks, the elderly services noted below), and, if so, the RCS appraisers must identify which services are included in the rent and which are incidental. If the comparable is incidental (i.e., the property offers the service for a fee, the service may be terminated at any time or the service is only provided on a sporadic basis), the RCS appraiser needs to value the availability of the service only. The value of availability is defined as the market value of the convenience of a non-shelter service if it were to be offered in the immediately surrounding community. For instance, if a nonprofit offers computer literacy classes at the property at an infrequent basis, the appraiser should consider how much value would be added if a nearby community center offered the exact same service. If the Owner offers a gym but charges a membership fee, the appraiser should consider how much value would be added if the property were in close proximity to a gym charging the same price and offering the same services. However, if the service is included in the rent at no additional cost, then the RCS appraiser must consider the full additional rent differential that tenants at comparable properties are paying for access to similar facilities without an additional usage fee.

Regardless of whether a service is included in the rent or incidental, the value of such services should be determined by the attractiveness of the services to tenants like those to whom the subject property is being marketed. If a service is not relevant to tenants like those at the subject property, its value should be diminished.

• b. Elderly/Disabled. At projects for the elderly and/or disabled, RCS appraisers must determine if the project provides emergency call systems, transportation, social or education activities, service coordination, meals, laundry, housekeeping, or other services.

• B.

• Reporting Comparable Data.

1. Comparable Project Profile. For each comparable used, the RCS appraiser must report the data collected in the Comparable Project Profile as required under Item K of Appendix 9-1-3 (Required Contents for an RCS). The Appendix 9-1-4 (Comparable Project Profile) provides a suggested format for reporting the data collected, but RCS appraisers may use their own formats if those formats include all the information listed in Item K of Appendix 9-1-3.

2. Rent Comparability Grid. For each primary unit type, the RCS appraiser must report the data collected by completing the data columns of the Rent

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Comparability Grid (Form HUD-92273-S8). The RCS appraiser must complete all lines of the Rent Comparability Grid ’s data columns (i.e., even lines/items for which the RCS appraiser will make no adjustment). All comparables for one subject unit type must be shown on one Rent Comparability Grid. RCS appraisers must review Appendix 9-1-1 for guidance on completing the Rent Comparability Grid .

3. Disclosure. In the Scope of Work Section of the RCS report, the RCS appraiser must identify any data on comparables that was unobtainable or estimated and must describe all efforts to obtain that data. RCS appraisers must review Appendix 9-1-3, item 2, for more detail on what the Scope of Work write-up must cover. It is considered best practice for the appraiser to maintain a work file including documentation of all research, documents, notes, etc. should investigation be needed on how particular data was obtained or why certain data was not obtained.