Trainee question

[MTM Valuation LLC]

a trainee peer of mine just asked the best way to execute an age adjustment, i dont often apply one as i usually consider age adjustments to be part of a condition adjustment, and she doesn't like my explanation. So here we are asking you guys which methods you use to ascertain an age adjustment or if you make them at all

 

[J Grant]

a trainee peer of mine just asked the best way to execute an age adjustment, i dont often apply one as i usually consider age adjustments to be part of a condition adjustment, and she doesn't like my explanation. So here we are asking you guys which methods you use to ascertain an age adjustment or if you make them at all

Good question!
Each appraisal is different - in general, I do not make age adjustments for minor age differences ( 26 years vs 21 years old, for example), and I do not typically make age adjustments where the condition and effective age are the same among different year-built homes due to updating and replacement. If the age is different enough to affect thecondition rating, I might apply the adjustment rating to the condition and not to the age ( to do both is double dipping) - however, at other times I will apply the adjustment to the age instead. There are times when an adjustment to both is supported.

There are no rules. Explain what you did and why, and it should make sense in the comps, having a narrower adjusted range after the adjustments are applied.

 

[Tom4value]

I agree with J Grant. Effective age is most influential in market value.

Condition adjustments are those I do last because matched pairs is the only reliable support for them. After other adjustments if a comp is out of whack, I look closely at the photos. If a comp is 30 years old and has zero updating and your subject has been updated, there you go (of course, it goes the other way for the subject).

The caveat is if the subject or comp is new construction and the other is, say 5 years old, the condition is good. It is age that is the difference and I comment that the condition difference (C1 vs. C2) is not adjusted, rather the condition difference is factored into the age adjustment.

 

[J Grant]

I agree with J Grant. Effective age is most influential in market value.

Condition adjustments are those I do last because matched pairs is the only reliable support for them. After other adjustments if a comp is out of whack, I look closely at the photos. If a comp is 30 years old and has zero updating and your subject has been updated, there you go (of course, it goes the other way for the subject).

The caveat is if the subject or comp is new construction and the other is, say 5 years old, the condition is good. It is age that is the difference and I comment that the condition difference (C1 vs. C2) is not adjusted, rather the condition difference is factored into the age adjustment.

I agree with your thinking. For me personally, when it is C 1 vs C 2, I adjust on the condition line because it is such a clear distinction, and comment that the age is factored into the adjustment.

 

[Jerry Bone Jr]

a trainee peer of mine just asked the best way to execute an age adjustment, i dont often apply one as i usually consider age adjustments to be part of a condition adjustment, and she doesn't like my explanation. So here we are asking you guys which methods you use to ascertain an age adjustment or if you make them at all

After all other adjustments are made, using the provided comparable sales, run single variable linear regression with age as the input and adjusted sale price as the output.
Additionally, using 50 or 100 neighborhood sales, run SVLR with raw sale price as output.
Analyze which is more credible.

 

[alebrewer]

Agreed w/most here. Typically, age is accounted for in the market via condition/effective age. That said, there ARE differences in housing styles based on age - tastes and preferences change over time, so that a home built in 1980 will most likely NOT look like a home built in 2010 (different room sizes, more open feel, etc.). This, however, could be accounted for (if one has to venture into this area for adjustment) in the functional utility field OR the YB field.

 

[Tom D]

In big very old urban city, after 25 years, age has no meaning. The difference is in gentrification, where the interiors are rehab new. Then it's a condition adjustment. 25 year old brick & 250 year old brick looks the same. Never had any buyer ask me the age of a home when i was a broker, unless it was newer. We didn't have newer homes when i sold, lucky me.

 

[sputnam]

Why isn't the trainee asking their supervisor?

 

[J Grant]

The appraiser is faced with contradictory facts, which is what makes it difficult. A home built in 1920, let's assume upgraded and maintained, might command a premium in some markets for architectural retro style, while in other areas it is just an old dump. Location is market-specific.

And even when the market pays a premium for the retro nostalgia, the pipes, plumbing and foundation are aging. But if we adjust for that, it skews the value.
Of course, the 1920's retro home, when stripped to the studs, renovated, and restored to preserve the charm, needs no adjustment - but those homes typically sell in the highest value range.

 

[J Grant]

Why isn't the trainee asking their supervisor?

IDK what is happening, but my impression is from posts over the last several years is that the supervisors are in name only. So few appraisers want to train that the training has fallen to AMC's, whose low fees caused the shortage of mentors who can afford to train. The AMC offers a meager bonus to a cert staff appraiser to train, and that appraiser does as little as possible. We see a plethora of trainee posts like this, where the mentor/supervisor is never mentioned as someone they can turn to.