Adjusted Sale Price Per Square Foot (asp/sf)

[BubbaP]

There is a significant reason that appraisers generally don’t apply the Gross Price/SF. It doesn’t take into consideration all the differences between the subject and the sales. Real estate agents tend to do this as do AVMs but you end up with wide ranges,

This discussion has nothing to do with gross price/SF.

 

[Mr Rex]

This discussion has nothing to do with gross price/SF.

The adjusted price per square foot includes the lot size and other improvements, so yes it does reflect gross price per square foot, that's why its if not completely useless, right next door to useless

 

[Michigan CG]

This results in a wide ASP/SF range of $135.00/SF to $165.00/SF, which is considerably wider than the SP/SF range of $140.91/SF to $158.33/SF. IMO this doesn’t make sense because the adjusted value range (whether using ASP or ASP/SF) should always be tighter than the unadjusted value range. Alternatively, dividing each comp’s ASP by the subject’s SF results in the following:

Comp 1: $303,000 / 2000SF = $151.50/SF
Comp 2: $297,000 / 2000SF = $148.50/SF
Comp 3: $298,000 / 2000SF = $149.00/SF

This results in a nice, tight ASP/SF range of $148.50/SF to $151.50/SF, which is considerably tighter than the SP/SF range of $140.91/SF to $158.33/SF, as it should be IMO.

I hope this clarifies the question/issue. Whether I’m correct or not, I would very much appreciate documented proof. I would think this topic would be covered in some appraisal text book, or that some highly designated appraiser guru would have published an article on this. If not, then IMO somebody should…

It makes complete sense that the $/SF of the comps adjusted and then divided by the subject's square footage would all be similar. The adjustment process is supposed to eliminate differences in the comps to meet the subject.

Comp #1 2,000 SF house with five acres sells for $250,000 ($125/SF)
Comp #2 2,000 SF house with three acres sells for $230,000 ($115/SF)
Comp #3 2,000 SF house with one acre sells for $210,000 ($105/SF)

Adjust them all for difference in land size ($10,000/acre) and of course the $/SF is the same.

Subject is 2,000 SF with two acres.
Comp #1 is adjusted to $220,000 or $110/SF
Comp #2 is adjusted to $220,000 or $110/SF
Comp #3 is adjusted to $220,000 or $110/SF

I don't get the purpose of the exercise as it is kind of a "duh" situation in that the $/SF should be the same if the adjustments are made correctly in a textbook kind of way.

 

[BubbaP]

It's obvious that many of you believe this topic is pretty much useless, irrelevant and/or not worth discussing. I honestly understand that sentiment; however, the fact of the matter is that some assessors defend their values using the adjusted sale price per square foot (ASP/SF) of their comps, and furthermore, are calculating it incorrectly IMO. I don't believe they should be using ASP/SF to defend their values, but they most certainly are; therefore, as a tax rep (often facing this issue in valuation hearings), I need documented proof that either 1) this is an improper/unaccepted practice, or 2) the proper/accepted technique.

Thanks again.

 

[Artemis Fowl]

KK. Back from La-La Land. I see it now.

 

[Michigan CG]

I don't believe they should be using ASP/SF to defend their values, but they most certainly are; therefore, as a tax rep (often facing this issue in valuation hearings), I need documented proof that either 1) this is an improper/unaccepted practice, or 2) the proper/accepted technique.

How about asking one of them where they get this goofy method from? Ask to see it in their training manuals or what source they use for this.

 

[Gobears81]

I reviewed a few appraisals recently where an appraiser valued SF houses and used a price per square foot. It was a little weird to see the garage and driveway adjustments based on a percentage of the price per square foot, but the values were about right. 1-4 family is one of the few property types where the adjustments are made to the sale price (rather than a unit of comparison), but there are cases where one can still ascertain an accurate value based on this methodology. I wouldn't personally value them in this way, btw. My guess is that the assessor has a commercial appraising background and thinks that everything can or should be broken down to a smaller unit of comparison.

 

[BubbaP]

How about asking one of them where they get this goofy method from? Ask to see it in their training manuals or what source they use for this.

Good suggestion, but I sure wish I could find some published documentation on this. However, I suppose that if it's not considered an acceptable practice, then nobody would want to explain it. Still, even if it's considered goofy, I think my position makes more sense.