A one year old sale is not a good comparable.

In order to determine comps you need a reasonable number of samples; a single outlier is insufficient. You should explain that the property was rundown and not representative of the neighborhood. Look around to see if you can find more recently sold properties that would provide you with a large enough sample size to determine realistic comps.

There are only two sales of similar homes recorded in the MLS sector and both are almost one year old. Other homes sales (recent) are much older homes on slightly more land. If I go back even more than 1 year prices comparables were in 300K to 350K on this street. Do we ask the agent to look at smaller similar homes and try to see the differences? For example, double garage adds 10K, etc.???

The sellers agent needs to inform the buyers agent of the difference in quality/needed repairs. The two agents should be able to put a price estimate on the difference and inform the buyer of the why's.

It's a valid question for the buyer to ask, it needs to be explained.

Appraisers call me frequently and ask about the condition of a recently sold property. They confirm with me, the listing agent, that it had auto sprinklers, fire place etc.
Comps should be the same style (2 story/2 story), as close to each other as possible and ideally within + or - 10% of the size and sold within the last 6 months.
In the absence of a reasonable comp, the appraiser will start looking at any 2 story close by and make adjustments in value for square footage, #Âs of beds, baths, garages etc.
Given the lots are similar in size like city lots (not acreage, if there is a size difference in acreage adjustments will be made), they will have no impact on value.
If there are no comps within 1 mile, the appraiser might have to expand the circle to a similar neighborhood further away to find a good comp.

"Other homes sales (recent) are much older homes on slightly more land."

Land can be adjusted for, just like small variations in square feet of the house.
A good appraiser will do the leg work to use recent comps and adjust for age (not as big a factor), square footage of the house (a decent factor) , and land (may be a large factor depending on local land values).

I sold my Mom's home about six years ago. There had been few sales in her neighborhod for several years so we had a very hard time finding true comps. We hired an appraiser to help us for two reasons: 1) to help us set (and justify) a fair price and 2) to know that when the buyer's (or their lender's) appraiser did their job, we be as close as possible. Worked out well.

Size. # of br's and sf'age.

Jeff - I see your point and feel your pain. Don't know the solution though other than to make sure that you or your realtor is somehow making sure that your advertising is spot on - I look for words like "mechanicals meticously maintained" "updated electrical" etc.

The above comments begin to sound like a discussion of - when can you use a realtor's CMA and when do you need to hire an appraiser?
I get the impression that a realtor's CMA/comp's work mostly in town, for subdivisions, in situations where everything is pretty much average there are lots of similar comparables and its just one for one matching easy easy.
If you have anything remotely different, are in an older neighborhood where there isn't a lot of turnover, etc. you need an appraiser. Is that what the above discussions lead to?
I'm in a rural area close to a small city. I built a very small stick built custom house with a full basement and geo thermal heat/cooling in the corner of 9 acres. Most of my comparables will come back on modulars, some on slab - which is very common when looking at comparable houses of square footage in the country. But they will probably have an outbuilding or fencing on the acreage and actually be bigger. I put my money in a basement, geothermal, stickbuilt, decent windows Hardy siding vs. vinyl etc. instead of square footage and fancy granite countertops. My house will be way out wack price wise to comparables. essentially I built a house I'd like to live in (single) for a long time but am now relocating and I'm so so screwed.