Adjustment for age

[Fred]

Steven you contradict yourself ... IF there is no market reaction or the market doesnt make any differential in pricing... the adjustment is ZERO .. isnt that what your first statement above means?????

It's not that they contradict, they address different points. Not my best writing.

 

[Ariba]

What is the year of construction for the subject and the comparables? How large is your market area? Can you go back in time, competing neighborhoods and/or market. UNLESS you serve a small market or rural area the information is there, you just have to look.

Maybe the field reviewer would be kind enough to tell you how he did it.

That might be nice but I doubt that training was part of the SOW for the review.

I have seen some areas where the older homes sell for more than the ones that are newer.Older homes have a greater market appeal.

I am sure you know that market appeal and age of construction are different adjustments.

Any adjustment, positive or negative should come from and be based on market reaction. What would you like to bet that the reviewers did not?

Why are we always to assume that reviewers are incompetent?

This may be a new wrinkle and not further the discussion. But I have never bought into the argument that the appraiser didn't make an adjustment. The adjustments was zero.

Sometimes adjustments have to explained, even if the adjustment is zero, to produce a credible understandable not misleading appraisal report.

 

[Fred]

Why are we always to assume that reviewers are incompetent?

"We" don't. When we are the reviewer, we assume the original appraiser is incompetent.

I am sure you know that market appeal and age of construction are different adjustments.

Don't they overlap? I think most of the time people find a new one more appealing than an old, used one.

 

[Ariba]

"We" don't. When we are the reviewer, we assume the original appraiser is incompetent.

:new_rainfro:

"Don't they overlap? I think most of the time people find a new one more appealing than an old, used one.

Not really. Appeal could include architectual home styles, Bungalow, Cape COD, Pueblo, Split Level, Ranch, etc. Nothing to do with age of construction of the home.

 

[Fred]

Not really. Appeal could include

Operative word: "could." It "could" also be more appealing because it is or looks "brand new."

It seems to me a wrote a memo about this many years ago when I worked in a shop that issued form reports. I noted how age, condition, appeal, overlapped. I noted that an another line: site and view included more than one factor on one line. I wrote up about a half-dozen "theories" of how to do it and suggested we take a vote and everyone do it the same way, to speed reduce arguments, speed the in-house review process and make our reports more understandable for repeat clients. Nobody gave a hoot.

 

[Ariba]

Operative word: "could." It "could" also be more appealing because it is or looks "brand new."

Agreed, but that could be condition and has still nothing to do with the line in the grid of actual year of construction. I am sure there are many ways of making age adjustments, :Eyecrazy: and as long as it is explained in the addendum of the appraisal report no foul. JMHO

 

[Don Clark]

IF the market includes the differential prices. Sometimes, it doesn't. You can't adjust for a reaction that isn't there.

That WAS my point Steven

 

[PropertyEconomics]

I very much prefer to make adjustments for age based upon market analysis on a percent per year basis.
If one measures on a total dollar amount and the contributory value of the improvements varies greatly ... then the adjustment would not be representative in my opinion.
I use a percentage per year as applied ONLY to the contributory value of the improvements of the comparable sales. In my mind it best allows for measurement of MOST things attributable to age including site improvements as well as living improvements any any other contributory improvement on the property.

 

[Eturner]

I often find in my market that a 10 year old home and a 25 year old home have a similar effective age. It the older home has a new roof, updated kitchen and bathroom and some replaced windows, the effective age can be deemed to be similar or (=E). The condition may also be similar if both homes have received good care and there is no significant evidence of deferred maintenance.

Ed Turner

 

[Fred]

That WAS my point Steven

I had a headache and was no writing clearly. What I meant was sometimes the market doesn't provide the sales in all categories to allow for market extraction. When that happens and an adjustment is indicated, the appraiser has to PFA it.