Actual Age Adjustment

[Shadix]

Just curious what yall use for an Actual Age adjustment? Appreciated any replies!

 

[Dublin ohio]

Seldom make an actual age adjustment unless for some reason I have to use a sale with a significant difference in age. For me condition differences are typically the adjustment if properties are relatively similar in age

 

[alebrewer]

I try to always use comparables of similar vintage, thus reducing any need for age adjustments. Even if the condition is similar between a 10 year old home and a 50 year old home, the homes (for the most part) just aren't viable replacements in the markets I'm familiar with. Older homes are typically more closed off, smaller baths, smaller closets, often bigger bedrooms, etc.

 

[CGinMN]

First, reframe it in your head from “what do you use for an age adjustment” to “how do I develop an age adjustment.”

Like most adjustments, age is highly correlated to other adjustments including condition, design, and quality. So determining how and whether you adjust for age depends upon how you develop these other adjustments.

 

[Tim Hicks (Texas)]

I agree that age may be as relevant as condition. Also, I rarely use sales 10+/- years different than the subject property and no age adjustment is necessary other than a condition adjustment. If you are forced to use a much older or newer home, it might be supportable, but then are you using the comparable sales? Those pesky underwriters will certainly ask that no matter how much you explain.

 

[Joe Flacco]

The year built is reflective of the trends of that time. It is not newer the better and older the worse. 80's homes more likely to have 8' ceiling height, smaller kitchens, and separated family room. 90's is when more open floor plans began appearing with larger kitchens open to the family room. Two-story family rooms also started becoming popular in the 90's and into the 2000's. but now is fading trend. Since the 2010's a lot of homes don't have living rooms and have huge kitchen / family rooms. A lot of home furnishings designed for newer homes like large sectionals won't fit in 80's - 2010 homes.

If there is a difference in value for age, it is not for how old the house is, it is these functional differences from changing construction and design trends.

 

[Tom D]

Big old urban, never made an age adjustment here. After a certain age point, it' not relevant. It's the interior condition. Most neighborhoods here are in a sim age range. The only time you notice the age of the house is when the inside looks like the 70' or 80's. So then it's bought, rehabd into new inside, then what do you say about the original age, nothin. But that's my big urban easy appraising life. Normally, only a couple imprortant adjustments and some small minor ones sometimes.

 

[CGinMN]

I’ve used age adjustments in lieu of condition adjustments for newer built homes. These homes might not have a discernible condition difference, but the roof/HVAC etc is depreciated more on an 8 year old home compared to a 2 year old home. Regression and sensitivity can be used to support the adjustment.

 

[Terrel L. Shields]

Strictly relate to Effective Age - but I want to use comps (unless simply not available at all) of reasonably similar time frames. So, a remodeled 2 story craftsman from the 20s or 30s may be in somewhat different condition (effective age), but if they are stylistically and size wise I'm good with it using reverse engineering the cost to estimate an effective age, which I can then use in a sensitivity spreadsheet. This is usually more similar and thus, in my book, more comparable.

 

[CGinMN]

Here is an example of how to estimate an all-inclusive condition/effective age adjustment:

Effective Age/Condition - Condition adjustments constitute the most significant adjustments in this appraisal. In determining the condition adjustment for each of the comparables, the appraiser estimates the effective age, economic life, and site value for the subject and each of the comparables. From this information, depreciation is extracted for the subject and comparables, a comparison is made, and when appropriate an adjustment is developed. The subject and Comparables #1 and #4 have an effective age of 12 years (actual age of 15 or 16 years adjusted downward for improvements made since the home was built), Comparable #2 has an estimated effective age of 5 years (actual age of 7 years), and Comparable #3 is a new built home with an effective age matching the actual age of 0 years. The total economic life of the homes is 60 years, and the value of the site is estimated at $30,000 for Comparables #2, #3, and #4, and $33,000 for the subject and Comparables #1 and #2. Based upon this analysis, the all-inclusive age and condition adjustment for Comparables #2 and #3 are estimated using the following formulas:

Comparable #2: (5-12)/60 x ($355,000-$30,000) = -$37,917
Comparable #3: (0-12)/60 x ($317,000-$30,000) = -$57,400