GLA Adjustments

[NC Appraising]

Perhaps but it's rural. 1100-3000 GLA and lots over 1 acre. Not a lot of choices. Went out 15 miles.

If I was a rural appraiser...and worked for AMCs and it went to the GSEs, I would walk right off a cliff. But on the other hand, there are probably only a few appraisers to chose from so hopefully you can tell them to go ......maybe I'm wrong? Is it less stressful for you rural appraisals?

Qualitative analysis for rural properties.

As for all this talk about sensitivity analysis, yeah I use it...but I do not pluck it out of then air.

How does one get that starting number? Seems that some are pulling it out of thin air.

Are we over doing sensitivity for GLA in a imperfect market just to tighten the comps to book form? Is the GLA adjustment the escape adjustment? Ahhh just put in the GLA adjustment, no one will know.

In my market where we have a influx of population from all over the country, and selling prices vary greatly for similar properties. Trying to tighten value ranges when the market is imperfect or is irrational is not appropriate. You are making the market....not reporting it.

Market cycles vary. Some market cycles allow for tighter value ranges (supply demand are in equilibrium). Some do not, under supply, high demand.

 

[Zoe]

Do you see the decline USA housing prices? That is why Fed reserve bank is considering rate cut.

Your market condition adjustments are questionable at best.

Long term mortgage rates are not tied to Fed funds lending rate. Long term mortgage rates are tied to T-bills.

However, many builders rely on short term interest rates from their lender. Fed Funds that Fed reserve bank charges banks is directly related to borrowers that have a loan on short term interest rate.

Home equity loans are also tied to fed funds rate that federal reserve bank charges banks. Many home equity loans have floating rate with federal funds rate that Federal Reserve Bank charges bank for overnight borrowing.

Federally insured lender either loans to the Fed overnight or borrows from Federal Reserve Bank. Sometimes, they don't do either. They stand status quo on a business day.

 

[gregb]

Do you see the decline USA housing prices?

Check by region, average vs median.

Q1 2025, Quarterly New One-Family Home Sales by Price and Financing: Median and Average Sales Price of Houses Sold by Region | FRED | St. Louis Fed

Release Table for Q1 2025, Quarterly New One-Family Home Sales by Price and Financing: Median and Average Sales Price of Houses Sold by Region. FRED: Download, graph, and track economic data.

fred.stlouisfed.org

 

[J Grant]

Artificially tightening the value range is not the goal. But well-developed adjustments do tend to tighten the value range. The OP report shows the reverse, per their grid in post 24.
Of course, rural or semi-rural comps or other complex properties are going to vary more and often will have a wider adjusted range. That said, poor comp choices or poorly derived adjustments or massaging adjustments to make a value will create problems that a $ per sf adjustment will not solve.

 

[Zoe]

The only rea

Check by region, average vs median.

Q1 2025, Quarterly New One-Family Home Sales by Price and Financing: Median and Average Sales Price of Houses Sold by Region | FRED | St. Louis Fed

Release Table for Q1 2025, Quarterly New One-Family Home Sales by Price and Financing: Median and Average Sales Price of Houses Sold by Region. FRED: Download, graph, and track economic data.

fred.stlouisfed.org

No two parcels of real property are the same. I have no clue on this subject real property. I appraise real property rights.

 

[Zoe]

Artificially tightening the value range is not the goal. But well-developed adjustments do tend to tighten the value range. The OP report shows the reverse, per their grid in post 24.
Of course, rural or semi-rural comps or other complex properties are going to vary more and often will have a wider adjusted range. That said, poor comp choices or poorly derived adjustments or massaging adjustments to make a value will create problems that a $ per sf adjustment will not solve.

I won't argue that. Most likely bad comp choices and bad market condition adjustments but I don't know subject or the market.

When you do huge positive market condition adjustments on 2 comps and negative on one comp on market condition?


I don't know the market.

 

[Zoe]

No. I'm just trying to figure out in a clear (SIMPLE!) concise manner if there is a way (read spreadsheet I can use) that will allow me to enter in certain data and out spits a "Per Foot" adjustment for GLA. May be "wishing" a bit here, but this is what I have come to think about this profession. In some instances, there are a number of ways one can do things vs. structured and universally accepted ways. Yet, they want us to be precise in our numbers. .....

Here is what I'm working with currently. Rural properties. Horses allowed.

How would you determine the GLA adjustment?

Look at sales grid you posted. Pay particular attention to market condition adjustments and land.

 

[OG80]

Here you go. Let the beatings begin

Put in addendum: For this assignment, the GLA adjustment was based on 75% of the average price per square foot of the comparables. This reflects rural market behavior where buyers often times assign lower contributory value to additional square footage, especially when homes are already adequately sized. In rural areas, land and external features often influence value more than GLA alone. The 75% rate captures this dynamic and avoids overstating value differences. This method is supported by observed sales and aligns with FNMA/Freddie Mac guidance, which permits market-derived percentage adjustments when supported and appropriately explained.

 

[Zoe]

Here you go. Let the beatings begin

Put in addendum: For this assignment, the GLA adjustment was based on 75% of the average price per square foot of the comparables. This reflects rural market behavior where buyers often times assign lower contributory value to additional square footage, especially when homes are already adequately sized. In rural areas, land and external features often influence value more than GLA alone. The 75% rate captures this dynamic and avoids overstating value differences. This method is supported by observed sales and aligns with FNMA/Freddie Mac guidance, which permits market-derived percentage adjustments when supported and appropriately explained.

Okay, how did you do market condition adjustments? How did you get such huge market condition adjustments? You didn't even have a GLA adjustment in first grid you posted.

Suddenly we have huge GLA adjustments.

 

[J Grant]

Here you go. Let the beatings begin

Put in addendum: For this assignment, the GLA adjustment was based on 75% of the average price per square foot of the comparables. This reflects rural market behavior where buyers often times assign lower contributory value to additional square footage, especially when homes are already adequately sized. In rural areas, land and external features often influence value more than GLA alone. The 75% rate captures this dynamic and avoids overstating value differences. This method is supported by observed sales and aligns with FNMA/Freddie Mac guidance, which permits market-derived percentage adjustments when supported and appropriately explained.

I have not heard of people adjusting for SF based on a % of the price. To be honest, this whole appraisal has so many problems that if I were a UW or reviewer, I might ask for another appraisal - or have a lot of questions about this one.

The sf adjustment seems to be around $190 per sf, which is high for that price range, where the land comprises half or more of the value, due to large sites. In your first posting of this grid, you had a mix of positive and negative market ondin atindutmens, now they are all negative. The market is declining?
One barn/workshop is adjusted at 50k and another at 10k ( why? ) n.

IDK who your mentor is but are they spending enough time with you....

Get your other adjustments right and the $ per sf adjustment is easy to extract. Do a cost approach - if the cost to build is $200 a sf, then the depreciated cost might be X$ $ and the contributory value of sf might be half the cost to build as a starting point, you can change it as the report develops, of course, but at least it makes sense. Then there re all the other problem child adjustments that send the sale prices up and down further apart from each other - weird small garage adjustment, land adjustments that seem rote rather than a contributory value of acrage and weird comp 3 a 1.69 acre sale that sold higher than comp 1 with 7 plus acres for no appranat reason - and so on. Why did a much smaller lot sale sell for so much more than larger acre sales ? Why did Comp 1 with the biggest acreage sell for less? Find the reasons and adjust for them. If you do that, the prices may start to make sense as adjusted.