Weighted Comps?

[Donna Durbin]

I don't mean to start an argument here but our client wants a weight placed on each comp and the logic used to get it. No averaging allowed. Comments are necessary indicating how each sale was weighted.

What are they looking for? I know some of you are argueing about Math Techniques and such but that isn't helping. I'm sure that some of us have turned in reports that were accepted and some rejected. Please share these experiences. I feel that my opinion is subjective here and is supported by the comparables. We always but more or less weight on each comp, but that figure can change of course by the available comps in any given area. They are seldom the same. HELP!!!

Thanks in advance.

 

[JC California]

Explain what you considered without giving a percentage and I believe you will be safe from arguments and disagreements from most appraisers.

 

[Tom Barclay]

I believe what they want to hear is that you gave one comp 50% weight, the other two 25% weight each. The percentages change depending on the reliability/similarity of the comps. If you have three very good comps you can give equal weight to each or 33.3%. If you have one very good comp and four crummy ones, you might weight it 75%, and four other comps 6.25% each. It's kind of anal, but they are attempting to get you to explain your reasoning for coming up with a point value when you have comps with different adjusted values.

 

[JC California]

Tom, Have you read some of the other posts (arguments) on this subject? You are probably right in describing what they want, but that opens the subject to the disagreements on this forum about the acceptability of any type of averaging in reconciliation.

 

[Blueprint]

We always but more or less weight on each comp, but that figure can change of course by the available comps in any given area. They are seldom the same. HELP!!!

Thanks in advance.

I determined average weight based on my analysis for zzz reasons. If you gave them equal percentage, simply state 33.33% if you had 3 comps, 25% if you had four, etc. If you did not equate like that, explain why. Whatever you actually did, state why and defend it. That is part of your job. All they are asking you is to inform them of how you estimated the final value.

 

[Tom Barclay]

JC,
I was/am not talking about averaging. I don't see any problem with giving the client what they want. If you have one sterling comp, give it 100% of the weight as long as the rest of the comps generally support that. They are trying to get you to quantify something that may be more qualitative, but in the process of doing that you are expected to explain your reasoning. Giving a percentage weight to the comparables to justify your conclusions is just another way to support your point value.

 

[Donna Durbin]

HERE IS THEIR ACTUAL VERBAGE: (Quote)

RECONCILIATION Per USPAP Standatd 2-2 (which for Summary Reports states: The appraiser must provide sufficient information to enable the client and intended users to understand the rationale for the opinions and conclusions, including reconciliation of the data and approaches, in accordance with USPAP Standards Rule 1-6) the sales compariosn approach MUST include a reported reconciliation of the final value. Regardless of the indicated value range, comments are necessary indicating how each sale was weighted including the **ACTUAL PERCENTAGE** and what logic was used to indicate a final value. THE CLIENT WILL NOT ACCEPT ALL SALES BEING WEIGHTED EQUALLY OR ANY OTHER SIMILAR KIND OF AVERAGING TECHNIQUE!! In all cases they want each sale individually weighted based on its similarity and difference to the subject, with detailed comments. The final value must be "bracketed" or fall within the range of the closed comparable sales, and should not be higher than the property developed indicated values of any submitted listings included in the report, as this will suggest to the client the value is overstated. (End Quote)

THANKS AGAIN FOR ANY HELP YOU CAN GIVE ME.

 

[Elliott]

Donna has a client that says, "Regardless of the indicated value range, comments are necessary indicating how each sale was weighted including the **ACTUAL PERCENTAGE** and what logic was used to indicate a final value. THE CLIENT WILL NOT ACCEPT ALL SALES BEING WEIGHTED EQUALLY OR ANY OTHER SIMILAR KIND OF AVERAGING TECHNIQUE!!"

The idiot that writes these appraisal requirements is the same guy who says
sales concessions should not be adjusted dollar for dollar, but doesn't suggest
an alternative. He floats from company to company and federal agency to
federal agency. I personally think he's an intellectual psychopath. I don't
know how he gets away with it. Its like he was sick the day they taught
elementary logic or Venn diagrams, and has never been to an appraisal
class or a statistics class. He's dangerous because desk jockeys think he
knows something and repeat his mantras and wrongly think they will improve
an appraisal report.

 

[Randolph Kinney]

Explain what you considered without giving a percentage and I believe you will be safe from arguments and disagreements from most appraisers.

I agree. If they want to do the math, let them. Comps 1 & 2 were given most consideration due to their similarity to the subject while comp 3 was given less consideration.

Algebraically, there is more than one solution in a combination of percentages of the three comparables. It can't make any difference in the ranking. The weighting goes to those properties that are most similar to the subject.

 

[Mike Boyd]

I would like to be a cynic and agree completely with Elliott. However, that does not solve the problem. All they want is your reasoning why more weight was given to one comp over the others. I.E. ...."comp one was in the same subdivision as the subject and, therefore, reflects more similar quality." Additionally, comp 1 appears to be a model match, thus demonstrating the same level of market acceptance. (and/or any other reasoning why you gave most weight to comp 1.)