How Austin Appraisers Choose Comps in a Buyer’s Market
Austin buyers are negotiating harder than they have in years. More than half of the active listings in the metro have taken a price cut, sellers are writing checks toward closing costs, and builders are stacking incentives to move standing inventory. Then the appraisal shows up, and the number on the last page does not always match what the neighborhood looks like on Zillow.
The gap usually comes down to one thing: which sales the appraiser picked, and what they did to those sales before comparing them to yours. Comp selection is a documented process with rules behind it, and most of those rules surprise people. Here is how appraisers choose comps, using a composite Southwest Austin file to show the arithmetic.
Key points:
- Fannie Mae requires a minimum of three closed comparable sales in the sales comparison approach. Listings and pending sales can support the analysis, but they do not replace closed sales.
- Sales from the last 12 months should be used, though the Selling Guide explicitly allows an older sale when it is the better indicator of value.
- Fannie Mae has no net or gross adjustment percentage limits. The widely repeated 15% and 25% caps are not in the Guide.
- Seller and builder concessions require a negative adjustment based on how the market reacted, and positive concession adjustments are never acceptable.
- 55.26% of active Austin listings had taken a price reduction as of September 16, 2026, with a 97.31% sold-to-list ratio (Team Price Real Estate).
- Time adjustments, or the decision not to make one, must be supported by evidence in the report.
How does an appraiser choose comps?
The appraiser is responsible for determining which comparable sales are the best and most appropriate for the assignment. Fannie Mae requires at least three closed sales, preferably from the subject’s own market area or subdivision, because sales in the same location reflect the same positive and negative location characteristics. Distance is reported in straight-line miles with a direction, such as “0.8 miles NW,” so a comp across a major road can look closer on paper than it feels.
Notice what that standard does not say. It does not say the three most recent sales, and it does not say the three closest. An appraiser who picks a sale two streets over from last month is not automatically doing better work than one who reaches further for a house that actually matches yours on size, age, and condition.
Can an appraiser use a sale older than 12 months?
Yes. The Selling Guide says comparable sales that closed within the last 12 months should be used, then immediately allows for exceptions, because the best and most appropriate comps are not always the most recent. Fannie’s own example describes using a nine-month-old sale with a time adjustment rather than a one-month-old sale that would require multiple adjustments. Older sales are acceptable when market conditions have limited the supply of recent ones and the report explains why.
That trade-off is the heart of comp selection. Every adjustment an appraiser makes introduces a judgment call, so a close physical match that needs one adjustment for date is often more reliable than a fresh sale that needs four adjustments for size, condition, garage, and lot.
A composite Austin appraisal, comp by comp
Take a 2,400 square foot house in Southwest Austin under contract at $525,000. The appraiser pulls dozens of candidate sales and narrows to three. The figures below are illustrative and rounded to show the mechanics, not market data for any specific neighborhood.
| Comparable | Closed | Distance | Sale price | Main adjustments | Adjusted value |
|---|---|---|---|---|---|
| Comp A: 2,450 sq ft, same subdivision | 3 weeks ago | 0.2 miles S | $540,000 | Concessions -$12,000; size -$5,000 | $523,000 |
| Comp B: 2,380 sq ft, same subdivision | 9 months ago | 0.3 miles E | $515,000 | Market conditions -$10,300; size +$2,000 | $506,700 |
| Comp C: 2,250 sq ft, adjacent neighborhood | 2 months ago | 0.8 miles NW | $505,000 | Size +$15,000; market conditions -$2,000 | $518,000 |
Comp A sold for the highest headline price and sits closest to the subject, which is exactly why buyers point to it. It also came with $15,000 in seller-paid closing costs. Comp B is the cleanest physical match in the file but closed nine months ago in a different market. Comp C required the largest size adjustment.
The reconciled opinion of value lands near $520,000, a little under the $525,000 contract price. Nobody made an error. The contract simply reflects what one motivated buyer agreed to pay, while the appraisal reflects what the adjusted evidence supports.
Do seller concessions lower your appraised value?
Concessions get adjusted out of the comparable sales rather than reducing your own property’s value. Fannie Mae requires a negative adjustment on any comparable sold with sales or financing concessions, equal to the increase in purchase price the appraiser attributes to those concessions. The adjustment reflects the market’s reaction, so it is not automatically dollar-for-dollar. Positive adjustments for concessions are never acceptable.
One line in the Guide matters more than any other in a market like this one: the need for the adjustment is not based on how typical concessions are for that segment of the market. Large concessions can be completely normal in a subdivision and still produce sale prices that reflect more than the value of the real estate. In practice, that is why a street full of builder closings at $540,000 with $15,000 of incentives behind each one does not establish a $540,000 value for the resale house next door. The incentive list explicitly includes interest rate buydowns and closing costs customarily paid by the buyer, which covers most of what Austin builders are offering right now. Our breakdown of builder incentives and their fine print goes deeper on that, and the same logic applies to seller concessions on a resale.
What happened to the 15% and 25% adjustment limits?
They are not Fannie Mae policy. The Selling Guide states plainly that Fannie Mae does not have specific limitations or guidelines associated with net or gross adjustments, and that the number or size of adjustments must not be the sole determinant in whether a comparable is acceptable. Those percentages circulate constantly in real estate forums, and they are not a rule an appraiser has to hit.
What replaced them is a harder standard. Adjustments must reflect the market’s reaction, derived from analysis of competing properties rather than a rule of thumb. Fannie illustrates it bluntly: a $20 per square foot adjustment is inappropriate when market analysis indicates the adjustment should be $100. An appraiser is expected to support the size of each adjustment without regard to arbitrary caps, which means a well-documented large adjustment is stronger than an undersized one chosen to keep a ratio tidy.
How do falling prices show up in the report?
Through market conditions adjustments, sometimes called time adjustments. The appraiser has to analyze whether conditions changed between the date each comp went under contract and the effective date of the appraisal, then support any adjustment with evidence. Home price indices, paired sales, and statistical modeling all qualify, and the report must summarize the data sources and techniques used.
The requirement runs in both directions. A decision to make no time adjustment also has to be supported, so an appraiser working with nine-month-old comps in a softening market cannot simply leave the dates alone. With the 30-year fixed averaging 6.95% in the Freddie Mac survey for the week ending September 17, 2026, up from 6.76% the prior week, affordability pressure has been feeding back into prices all year. You can see where pricing stands on our Austin mortgage rates page.
What this means when you write an offer
Ask your agent for the closed sales an appraiser would likely use, not the active listings that set your expectations. Ask specifically whether concessions were attached to any of them, because that information sits in the MLS and rarely makes it into a buyer’s mental math. If the comps supporting your price all carry incentives, build that into your offer or your gap coverage rather than discovering it three days before closing.
At Mortgage Austin we run automated underwriting early so you know before the appraisal whether a waiver is even in play and how much cash you have available if the value lands short. If it does come in low, the options are covered in our guide to appraisal gaps and what buyers can do.
Frequently Asked Questions
How many comps does an appraiser have to use?
Fannie Mae requires a minimum of three closed comparable sales in the sales comparison approach. Appraisers frequently report more than three when additional sales support the opinion of value. There is no maximum, and a fourth or fifth comp is common when the first three each require sizable adjustments.
Can I give the appraiser comps I found myself?
You cannot hand them over directly, but your agent or lender can submit closed sales for consideration, and your lender can request a reconsideration of value after the report is delivered. Concrete evidence carries weight: sales the appraiser did not use, or factual errors such as wrong square footage. An argument that the value simply feels low does not.
Do builder incentives show up in the comps?
They should. Sales or financing concessions on a comparable require a negative adjustment equal to the price increase the appraiser attributes to them, and rate buydowns and buyer closing costs paid by the seller both count. The adjustment applies even when those incentives are standard for the whole subdivision.
How far away can a comparable sale be?
Fannie Mae sets no mileage cap. Sales from the subject’s own market area or subdivision should be used when possible, and the appraiser must report the straight-line distance and direction for each one. In areas with few truly comparable sales, more distant properties are acceptable when the report documents the analysis and explains the choice.
Are pending sales and active listings used as comps?
They can be included as supporting data, but they do not satisfy the three-closed-sale minimum. A pending sale has an agreed price that has not been verified by a closing, so it carries less weight. New and recently converted projects are the narrow exception, where two pending sales in the project may stand in for one settled sale.
Why did the appraiser use a sale from nine months ago?
Usually because it matched your house better than anything recent. The Selling Guide allows an older sale with a time adjustment in place of a newer sale that would need multiple adjustments, and it allows older comps when market conditions have thinned out recent sales. The report has to explain the reasoning.
Does an appraiser have to adjust for a declining market?
The appraiser must analyze whether conditions changed between each comp’s contract date and the effective date of the appraisal, then support any market conditions adjustment with evidence such as price indices or paired sales. Choosing not to adjust also has to be supported. The report must summarize the data sources and methods behind that call.
Understanding comp selection before you write an offer is the cheapest insurance available in a market where concessions are everywhere. Schedule a discovery call and we will look at what the recent sales around a specific property actually support, no pressure and no commitment.
Anthony Ferrando NMLS# 1919613 | Client Direct Mortgage NMLS# 1065732 | Licensed in Texas. This content is for educational purposes only and does not constitute a commitment to lend. Loan approval is subject to credit, income, and property qualification. All values, adjustments, and payment figures shown are illustrative examples, not a rate quote, an appraisal, or an offer of credit, and your actual figures will depend on the property, the appraiser’s analysis, and your full financial profile. Sources: Fannie Mae Selling Guide B4-1.3-08 and B4-1.3-09 (06/04/2025), Freddie Mac Primary Mortgage Market Survey (week ending September 17, 2026), Team Price Real Estate (data through September 16, 2026).
