GLA Adjustments

[Joyce Potts]

Get out much? Start listening to the marketing pitches by certain instructors who advocate that any and all adjustments must be mathematically supported. Like Richard Hagar.

 

[Artemis Fowl]

At the very least, prior studies and analyses that can be referenced in a workfile. Sensitivity analysis is quick and easy...I don't generally include that worksheet with all formulas in a report but I can produce it from a workfile if needed. Sometimes logic and reason are the best support, but we are talking about a GLA adjustment here and not some unique influence that begs significant explanation.

Using logic and reason I will conclude that neither of us gets out much...we're here having this conversation after all.

 

[J Grant]

Get out much? Start listening to the marketing pitches by certain instructors who advocate that any and all adjustments must be mathematically supported. Like Richard Hagar.

He's trying to sell stuff, or sell his courses. As are many of the people touting programs that offer mathematical or statistical "support"...

 

[Deleted member 128537]

I took a course sometime back on how to support adjustments using regression, blah, blah, blah. It might work in a very homogenous market. I once extracted the garage adjustment in a suburb that had largely identical homes (very similar style GLA, etc) Ironically it wasn’t much different than what I was already doing. But it was hard even in a very homogenous neighborhood.

What was funny is that the instructor used regression analysis and came up with a range of 2,000 to 8,000! I can do that good by guessing!

I was taking a USAP course about 5 years ago. The instructor basically said don’t ever say you used paired sales analysis in your report. No such thing really exists in most markets. He basically said when you make an adjustment use reasonable judgement and some common sense. And then gave some examples.

IMHO these classes are great ways to make money and make us all frustrated.

 

[J Grant]

Paired sales exist in markets...all you do is take two sales and pair them on a grid, to extract a residual amount for a line item adjustment. Matched pair sales are hard to find...that would be a pair of sales that match except for one variable to be adjusted for.

Imo, an adjustment is best "supported" when it comes from a range of sources....such as paired sales, line item sensitivity, RE agent feedback, a relation to cost approach, and/or return from income approach, (or statistics for those that use them), as well as adjustments developed in past appraisals for similar features.

If all the sources point to a similar result, then that is the support for the adjustment.

 

[Joyce Potts]

Yes, selling classes by fear mongering.

 

[Doug in NC]

Estimating a SF adjustment can be done by simple reasoning and experience. Basically you are doing sensitivity analysis by working thru the number that fits best, I.e.- the lowest spread between adjusted numbers and you are doing it by changing the SF adjustment in the grid until you have it as tight as possible. But that isn't documentation. All a sensitivity analysis or paired sale does is document what you are doing in the first place. There is no need to slam someone for doing what even some of us old heads did for half our career before reviewers became myopic and couldn't see the obvious.

That is the method that I typically apply. Once all other adjustments have been made you are left with a range of square foot value that will bring the adjusted comps into the tightest final value range. It is basically a hybrid form of matched pairs analysis and the reason many appraiser choose comps which bracket the subject in terms of price, size, age and other features.

 

[Doug in NC]

Paired sales exist in markets...all you do is take two sales and pair them on a grid, to extract a residual amount for a line item adjustment. Matched pair sales are hard to find...that would be a pair of sales that match except for one variable to be adjusted for.

Imo, an adjustment is best "supported" when it comes from a range of sources....such as paired sales, line item sensitivity, RE agent feedback, a relation to cost approach, and/or return from income approach, (or statistics for those that use them), as well as adjustments developed in past appraisals for similar features.

If all the sources point to a similar result, then that is the support for the adjustment.

I have found that determining a square foot adjustment from a true "matched pairs analysis" (using only 2 sales), as we were taught in appraisal school, is extremely difficult to do. And the higher the price range of the property being appraised, the harder it becomes to extract square foot adjustment from only 2 sales. Adjusting properly for age, porches, quality and other features is critical to determining how much value is associated with variation in size of GLA.

 

[Meandering]

Yes, selling classes by fear mongering.

Hey joyce,

If I came to your service area and used the same regression analysis you were using, what would make your report better than mine? Your years of training and education and experience in the neighborhood, much more than me, has to be evident some where in that opinion of value. Or is the real secret of all that training and experience supposed to be found in the explanation of the same regression model, like, it wouldn't be boiler plate? Maybe we could argue over the data used to produce that model was better selected because of training and experience, but when you are using all sales, the model picks the best.

Becareful of what you advocate for, as it's easy to create software to come up with numbers and sure as heck no experience in real estate appraising is even needed to download all the sales into a program and copy and paste boilerplate.

.

 

[Terrel L. Shields]

our years of training and education and experience in the neighborhood,

The heuristic of experience is the key to correct valuation. The requirement of "proofs" is a UW thingy and no one can reproduce experience on paper. You have to "show your work"...like in algebra when you had the right answer but still got a zero because you didn't write out the logic that led to the answer.