Qualitative Adjustments

[Basically Rectangular]

Anyone use qualitative adjustments?

I am looking to start a discussion on this topic. Any tips on supporting qualitative adjustments, literature and publications regarding the use, development, and acceptable support of qualitative adjustments is appreciated.

The intended users do not include GSE's. Residential application (for my purposes), but commercial discussions are welcome.

 

[LifetimeStudent]

Yes, I use them in every report I do. I think qualitative adjustments best reflect what a buyer does in the marketplace.

 

[Michigan CG]

The best appraisal I have ever read was of a car dealership and it was 100% qualitative. My land appraisals are almost all qualitative. Every appraisal assignment, if completed correctly has a qualitative opinion in it.

 

[The Bob]

When I was first taking my appraisal classes, I remember one text that showed the grid with no adjustments, just "Superior" and "Inferior" I always thought that was closer to how the market really works.

 

[Pittsburgh Pete]

Qualitative analysis is indispensable in some instances!

 

[Mark K]

The majority of my reports these days are qualitative. I include a grid only if required by the client (certain R/W formats) or if it makes it easier to illustrate the differences or for the client to understand the report.

Supporting qualitative adjustments? I've found statements like; Comp #1 is superior because....Comp #2 is inferior because, etc. ... to be sufficient; haven't had a client question or complain yet.

Reconcile to a best fit and generally the value will be just as credible as a value that's derived from a lot of 'supported' adjustments in a grid.

 

[J Grant]

Yes, I use them in every report I do. I think qualitative adjustments best reflect what a buyer does in the marketplace.

A "qualitative adjustment " is really no adjusment, correct?

It's a read on market reaction that informs an appraiser's judgement how they weigh or rank , or consider information, a comp, or a features of a property , that supports why they opine at a higher, lower, or mid range of value .

 

[J Grant]

Yes, I use them in every report I do. I think qualitative adjustments best reflect what a buyer does in the marketplace.

I use both qualitative and quantitative in an appraisal ( many reports do )

A "qualitative adjustment is not adjustment ( my above post )...it can be a ranking ( inferior / superior/r equivalent ) however no monetary numerical adjustment made.

I have to disagree that an appraiser making no quantitative adjustment reflects what a buyer does in the market place. Having sold RE ... buyers make "adjustments" (via what they pay or what discount they expect ) with their wallets - Buyer: "I will pay more to view the lake and pay less to view a parking lot". Result of that: , the lake view sale sold for 300k, the parking lot sale sold for 250k.

 

[Basically Rectangular]

Lets say the subject has a GLA of 2000 sqft. Comp 1 has a GLA of 1700, Comp 2 1900, and Comp 3 2200 sqft. Assuming all else equal, in the line item for GLA we would place a descriptor rather than a number?
Assuming the sales prices of the comparables increase as the square footages increase, could we describe the GLA line item as -2 for Comp 1, -1 or 0 for Comp 2, and +2 for Comp 3?
example:

_______Subject_________Comp 1 _________Comp 2 ________ Comp 3 _________
GLA__2000 sqft _______ 1700 sqft __ -2 __ 1900 sqft __ 0 ___ 2200 sqft __ +2 __

Perform the same for relevant line items and total up the adjustment indicators at the bottom? In this case the value closest to zero should indicate a probable value for the subject? Is this (at its most basic) what a qualitative analysis would look like?

 

[bnmappraisal]

I would advise something similar to what Mark K posted

I've found statements like; Comp #1 is superior because....Comp #2 is inferior because, etc. ... to be sufficient; haven't had a client question or complain yet.

i.e. in your example (post #9) comp 1 inferior ... comp 2 similar/equal ... comp 3 superior ...