Glossary of Terms
A neighborhood boundary defines the geographic limits of a neighborhood an appraiser uses for market analysis. Boundaries may be described by streets, highways, natural features, municipal lines or other recognizable features and help establish the area in which properties compete for buyers.
Drawing a boundary is an analytical judgment rather than simply an administrative step. An appraisal neighborhood generally consists of properties that share similar characteristics, market influences and price levels. A four-lane road, river or municipal boundary can separate two areas that appear adjacent on a map but function as distinct markets.
The boundary helps determine which sales and market data are relevant to the analysis. Reviewers may question a report when comparable sales fall outside the stated neighborhood without explanation. Clearly describing the boundary helps show why the selected data provides meaningful context for the subject property's market.