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Adjustments Question

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Peggy Wright

Sophomore Member
Joined
Mar 16, 2003
Hi all.

Appraiser trainee here. I'm kind of in a catch 22. I am working with a long time acquaintance who is very familiar with my 12+ years in the home building/renovating/developing business. Because of my experience, I think he's assuming I know more than I do. Don't worry, I am asking questions, but I'd kind of like to speed my education along, and create my own processes/proceedures at the same time.

When doing adjustments for size, materials etc, I know that most use Marshall & Swift as their reference. Here is my question. When I'm valuing a house that has various types of materials, I don't get to see the inside of the comps to know if they are an up or down adjustment in comparison. Ok, so the subject has oak trim, oak railing, tile floors etc, etc, and the comps all are of similar quality/upkeep on the outside. How do you know where to adjust for the quality of materials? I know that an appraisal is an OPINION of value, and that certain assumptions must be made. What are your thought processes on determining them?

Also, I am really looking for some good references of how to (report writing, determining value, cost comparison). I am so new, there is a lot I am uncertain about in the appraisal process. I realize that my mentor reviews my work, but I really like to dig deep and truly understand the process of what I'm doing, vs doing what is only neccessary. Any recommended reading would be greatly appreciated.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Welcome to the forum and hopefully you will get several replies with some ideas to help you. Let me recommend Henry Harrison's Illustrated Guide to the URAR form. It will give you a line by line guide for everything on the form. Check it out at www.formsandworms.com.

Now to your question about the quality of materials....you are right you won't know everything about the comps. The easiest way to solve your problem is to use comps from the same neighborhood which should be of similiar quality. You can ask the agent about the special features of the comps but don't be too suprised if they are not much help.

I wish you well.
 

Peggy Wright

Sophomore Member
Joined
Mar 16, 2003
Thanks for your welcome and the feedback. I really do look forward to learning here!

I also had another question along the same lines. As a previous builder/rehabber, I know what a fence would cost me. But I also know that the added value of that fence to a property is different, and very likely less, than the cost to build it. What are the best methods of extracting this information?

In our classes we did some examples of how to compare one like unit to another, one has a fence, one doesnt. Ok, but the chances are, that fence is not the only difference. It might have a different lot size, larger bedrooms, a full bath instead of a half. etc. Just trying to figure out the most appropriate and logical ways to extract what the public is willing to pay for added features, or how much to deduct. For example, in my area, my mentor told me that for a 1/2 bath, people will pay $500.00 more for a house that has only one bath, in a house under $100k. So, how do I most acurrately derive that. I know he knows, because he knows his market and has been doing this for 22 years.
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Peggy,

Welcome, here's my 2 cents worth......When considering adjustments put yourself in a typical buyers shoes. Does that oak trim really require an adjustment? How much more would you pay for a larger bedroom in the market your are appraising? HINT: Some of the information is available to you from the local MLS......Look at various homes in the area and the differences in sale price vs. amenities. For instance, In my market, a 3 bedroom home and a 2 bedroom home with identical GLA have no real difference in sale price. The difference is solely seen in GLA. Also take a look at market activity and available inventory. In a market with scarce inventory, (for instance) some amenities have even less market recapture value because of buyer competition.

Good Luck.... Hope this helps.....
 

EDWARD BERRY

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Peggy,

Welcome, all of us were at this stage once-some still.

Not knowing your location, but some thoughts.

IF you are in active market, contact your most trusted Realtor.(there are some)

Get permission to view some listings, take notes as if you were appraising it.

When it sells, go back to your worksheet. and TRY to appraise it. You now know the value.

Chances are if you pick reasonable sales, you can ascertain what items are really important for adjustments.

This may take several months.

I our market, SIZE is first, others are Garage, FP, CH/Ac and LAND. When inspecting the listings, try to ESTIMATE effective age. In some markets the builders have built a similar floor plan for several years, so about the only real difference is effective age and perhaps land value.

These are NOT RULES but they have helped me for 25 years and 7,000 appraisals.

Many, Many good appraisers are on this forum, do not hesitate to ask.

Good Luck, ed in Arkansas
 
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