New Reconcilation Comments

[Tom Woolford]

I make comments for the sales comparison analysis by itself. I start with the subject and describe it. I then talk about my search perimeters used to find comparable sales. I then comment on each sale in the order in the grid and explain my adjustments. I then reconcile why I used each sale. I then reconcile the entire sales comparison analysis. After than, I look to see if the cost approach if applicable or necessary to produce a credible appraisal report. If it is, I complete it. Same with the income approach. The final reconciliation describes what approaches I used and any other factors that may have been considered when arriving at a final value.

Exactly right. My reconciliation may take as long to write as preparing the rest of the report (formfilling). Typically I'll fill up the whole third page and sometimes runs over to the supplemental addenda. The users / readers of the report are not mind readers. I try to answer every question before the even think about it. Only very rarely do I get a request for a comment about "X", and invariably, it had already been addressed.

 

[BRCJR]

My understanding is that they want similar comments to what RSW just replied, which would take a considerable amount of time. I am not lazy with my work, however, the more additional "requirements" I have, the less time I have to spend actually doing my job. I have done 3,000 appraisals? over the years and have had 2, maybe 3, complaints about my value (value disputes from owner), basically no problems as I am honest and competent (and humble ha ha). But now I spend so much extra time with additional BS, that this is one more headache that is difficult to put into a paragraph.

This is not "new"......

 

[JTip]

Keep it simple.

"Most consideration towards the final opinion of value was given to Sale #1 (most recent direct neighborhood sale, similar room count/GLA, lowest net/gross adjustments)."

 

[Tom4value]

this. i can't tell you how many reports i've reviewed where the summary of the sale comparison is just a rehash of what the grid states without any summation at all (baths adjusted $X per fixture, GLA adjusted $Y per sqft, lots adjusted $Z per acre, etc - no kidding, i can read the grid too). amazingly every single report has the "best available comps" - no kidding? you mean you didn't pick the 4th, 5th and 8th most similar comps to use in your report?

same thing for the final recon., just a generic statement about "cost and income approaches are not applicable, sales comparison was used to determine price" with a few more fluff words thrown in.

You are correct. However the reason why appraisers do this is because that is what underwriters are looking for!

I remember one difficult assignment. The subject was a real oddball and none of my comps were what you would call similar in most assignments. Needless to say, I wrote the Great American Novel, explaining every comp, why I used it, why I didn't use others and reconciled each comp with weight and influence. It came back with the stip, "appraiser to comment on deck adjustment to comp 2". REALLY? They didn't even read it. They just went through a checklist of what needed to be in the comments.

 

[ZZGAMAZZ]

Nothing new about reconciliation. Report should lead the client and any intended users to a logical conclusion. Take what you put together and paint a picture of the conclusion. Here is an example:

Reconciliation within the sales comparison approach

I have included four closed sales within the immediate neighborhood, two that are inferior to the subject (sales 1 and 3) and one that is generally equal but just slightly inferior (sale 2) and one sale that is superior to the subject (sale 4). Without regard to any adjustment other than small adjustments for changing market conditions on sales 3 and 4, the inferior properties point to sales prices of $525,000 and $565,575 respectively, indicating that the subject value should be greater than $565,000. The superior property sold for $620,000, adjusted only for changing market conditions. The one sale that was most similar sold for $580,000 but it remains slightly inferior.

Logically, the subject value should be greater than $565,000 and lower than $620,000 without regard for any adjustment other than market, and it should fall closest, but slightly above, $580,000 based on this analysis of the unadjusted range.

After making adjustments for the elements of comparison that I deem most important, namely location within the subdivision, market conditions, size, basement finish and overall updating, the sales price ranges narrow significantly from a low of $588,000 to a high of $595,000. As three of the sales adjust in a narrow range around $595,000 and the market appears to be on verging on an upswing again, I am concluding to the higher end of my adjusted sales price range at $595,000. Note that the unadjusted range is greater still and brackets both on the lower and higher ends and I consider this a well-supported analysis.

Point of clarification on where adjustment are derived – they are through the use of grouped paired analysis related to the basement finish, as well as the trends data above, and depreciated cost on gross living area. All are downgraded somewhat as the sales are then compared to each other, and although the market shows a greater increase in price over time than what is used, the two recent sales give a good indicator of where the older sales should be, and the basement finish of the three comparables with finish, helps set an indicator of value for the one sale without

 

[ZZGAMAZZ]

Nothing new about reconciliation. Report should lead the client and any intended users to a logical conclusion. Take what you put together and paint a picture of the conclusion. Here is an example:

Reconciliation within the sales comparison approach

I have included four closed sales within the immediate neighborhood, two that are inferior to the subject (sales 1 and 3) and one that is generally equal but just slightly inferior (sale 2) and one sale that is superior to the subject (sale 4). Without regard to any adjustment other than small adjustments for changing market conditions on sales 3 and 4, the inferior properties point to sales prices of $525,000 and $565,575 respectively, indicating that the subject value should be greater than $565,000. The superior property sold for $620,000, adjusted only for changing market conditions. The one sale that was most similar sold for $580,000 but it remains slightly inferior.

Logically, the subject value should be greater than $565,000 and lower than $620,000 without regard for any adjustment other than market, and it should fall closest, but slightly above, $580,000 based on this analysis of the unadjusted range.

After making adjustments for the elements of comparison that I deem most important, namely location within the subdivision, market conditions, size, basement finish and overall updating, the sales price ranges narrow significantly from a low of $588,000 to a high of $595,000. As three of the sales adjust in a narrow range around $595,000 and the market appears to be on verging on an upswing again, I am concluding to the higher end of my adjusted sales price range at $595,000. Note that the unadjusted range is greater still and brackets both on the lower and higher ends and I consider this a well-supported analysis.

Point of clarification on where adjustment are derived – they are through the use of grouped paired analysis related to the basement finish, as well as the trends data above, and depreciated cost on gross living area. All are downgraded somewhat as the sales are then compared to each other, and although the market shows a greater increase in price over time than what is used, the two recent sales give a good indicator of where the older sales should be, and the basement finish of the three comparables with finish, helps set an indicator of value for the one sale without

Your comments are very scholarly, and your willingness to share greatly appreciated. This question probably has no absolute answer, but I'm wondering whether you ever considered using "the/this appraiser" rather than "I"?

 

[Michigander]

Your comments are very scholarly, and your willingness to share greatly appreciated. This question probably has no absolute answer, but I'm wondering whether you ever considered using "the/this appraiser" rather than "I"?

Thanks, it seems more true to the problem at hand when I am addressing that I did something. I used to write "the appraiser" but since the appraiser was me, figured I'd just say so. Thank you for your comments. I appreciate them.

 

[Michigan CG]

Your comments are very scholarly, and your willingness to share greatly appreciated. This question probably has no absolute answer, but I'm wondering whether you ever considered using "the/this appraiser" rather than "I"?

There are some of us who write in the first person and I always find it odd that folks write in the third person. I was trained to write in the first person and my mentor basically said the same thing, WHO wrote the report, WHO did the research and WHO came up with the value? It wasn't some random guy on the corner, take credit for it.

You will find it is more common in commercial practice than residential practice.

 

[bnmappraisal]

Thanks, it seems more true to the problem at hand when I am addressing that I did something. I used to write "the appraiser" but since the appraiser was me, figured I'd just say so. Thank you for your comments. I appreciate them.

There are some of us who write in the first person and I always find it odd that folks write in the third person. I was trained to write in the first person and my mentor basically said the same thing, WHO wrote the report, WHO did the research and WHO came up with the value? It wasn't some random guy on the corner, take credit for it.

You will find it is more common in commercial practice than residential practice.

You both make good points. I, as a creature of habit, have always (and just this morning finishing up a report) type "the appraiser" ... I guess it does make more sense to say "I"
I'm going to start using that more

 

[Peter LeQuire]

Third person - now just throw in a little passive voice and you're all set!