You first have to ask yourself, what is the purpose of market maker? If the purpose of market maker is to help you set your rates, and it is, it is of no help to you if the data being pulled skews your rates. In my market there are several hundred condos in a very close proximity. Actually probably many several hundreds. They come in one, two, and three bedrooms. They come in beachfront and also across the street from the beach. I limit my competitive set to three bedrooms across the street from the beach. Period. that is what we are and that is where we are located. One-bedrooms on my side of the road skew my rates too much in a downward direction. Three bedrooms oceanfront skew my rates too much in the upward direction. Neither of those would be helpful to me in setting my rates. My competitive set on VRBO is approximately 100, three bedroom condos, across the street from the beach. 100 is more than enough properties, and since they are all the same amount of bedrooms as mine, and within a quarter-mile radius of mine, that gives me the absolute best data to base my prices. THAT is the ultimate goal. you know your market. VRBO does not know your market. The algorithms do not know your market. So ignore the error messages and do what you know is correct.
Yes, best practice is to define your competitive set and regularly maintain it to ensure they don't add additional non-competitive properties.
Some markets are better than others for MM. My market is a resort and there are 150 properties exactly like mine within 1 block of each other, so it's simple for MM to build a list of competitive properties. Other properties are in locations or markets where a "competitor" is more difficult to clearly define.