Appeal adjustment

[Tom4value]

Appeal adjustments should be the rarest adjustments you make. They are the hardest to support. The only way to derive it is with matched pairs and if it is not comparable, how can you really derive a “matched pair”? If you are making across the board appeal adjustments, go back to the drawling board on comps.

The only time I have an appeal adjustment is if I need to derive support for an item, ie., a barn or a location. Most times, the appeal is so dissimilar I don’t put the property on the grid. I just explain that I used matched pairs with another sale comparable to that other one that has a similar item.

 

[Sadie]

Appeal adjustments should be the rarest adjustments you make. They are the hardest to support. The only way to derive it is with matched pairs and if it is not comparable, how can you really derive a “matched pair”? If you are making across the board appeal adjustments, go back to the drawling board on comps.

The only time I have an appeal adjustment is if I need to derive support for an item, ie., a barn or a location. Most times, the appeal is so dissimilar I don’t put the property on the grid. I just explain that I used matched pairs with another sale comparable to that other one that has a similar item.

Appeal is so subjective and I have only done it once or twice. It was to comparable properties and it was a long time ago when we still had appeal on the design line.

 

[Michigan CG]

Instead of making an adjustment why not use your reconciliation and reconcile to the higher end of the adjusted range.

 

[Sadie]

Instead of making an adjustment why not use your reconciliation and reconcile to the higher end of the adjusted range.

It was along time ago and I don't make that kind of adjustment now. Too subjective for a line item.

 

[Elliott]

Bob,
If the subject is more appealing, then its superior to the comparables and you make a negative adjustment. Of course you can make any adjustment you want, but you have to make credible and supported adjustment. Just a suggestion, you might just want to include it 'inside' some other large adjustment item, like condition or age. Look at your comparables and see if you can shoehorn it in. Even D Wiley won't probably catch it.

 

[RCA]

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If you think it may be considered subjective, maybe it is. Is the subect design different from the comps, the latter of which reflect a distinct neighborhood standard? Maybe being different makes the subject "superior" rather than "inferior." Is market exposure more or less than the standard? What do local realtors say including the selling agent if it's a purchase?

One way to calculate adjustments is to first calculate/estimate the value "contribution" of various features to each of the comps. All contributions should add up to the sale price adjusted for concessions and financing terms call it "S*". If you take the value contributions of all the non-subjective features and subtract them from the sale price S*, then you get the sum of the value contributions from all subjective features. You can do that for each of the comps, i.e. their sale price has put a cap on the total contributions form all subjective features. Then you compare the subject to the comps and estimate the value contribution of its subjective features in comparison to the features of each comp and their subjective feature contributions. You can then get a fairly good estimate of the total contiribution of all subjective features for the subject, and then take the difference betweent the contributions to get an adjustment which you can then divide between multiple subjetive features however you want - because how you divide it has no impact on the final adjusted sale price - it only serves to explain to the client the "why". Now, the way I explain it here, is kind of leaving a lot up to you. I have MARs regression to make this more straightforward, but you likely will not go that route. If you have any questions, you'll have to figure it out yourself.

 

[Tim Hicks (Texas)]

Maybe you should make a one line item adjustment for "Tesla" like Fernando.

 

[Tim Hicks (Texas)]

Where I live in the Inland Empire region of Southern California, like 95% of all SFR's built during the past 25 years are basic, ugly, stucco. Because we can't use various terms like "conventional" or "traditional" I started using "CA Non-descript," just to see what kind of reaction I'd get from clients!!!

If there is a nomenclature for a style of home for your area, you are allowed to use it. Here, 95% of homes are called "Traditional" on MLS listing and by owners and sellers. So, the term "traditional" is a typical style of home and it does not get rejected by underwriters ever, Even, HUD accepts "traditional" now. But, we can't say "master" anything anymore.

 

[ZZGAMAZZ]

Maybe you should make a one line item adjustment for "Tesla" kike Fernando.

Boy I haven't heard that term for decades. Never a good connotation.

 

[Bobby Bucks]

Subject is a 2 story colonial, remodeled and updated in every way and has great landscaping and street appeal. Sale 1 is a Hideous Victorian (hideous with capital H) with an ugly addition on the side visible from the street. Sale 2 & 3 are Contemporary, 70s contemporary that look like they’re in a Twilight Zone movie set. The subdivision is a classic example why neighborhoods began establishing ARC’s. All 3 sales are similar in quality, condition and GLA. I do have a 3 year old colonial sale and an ugly 70s contemporary in the subdivision in my file just in case I get reviewed by an AMC team leader with an ax to grind, I’m not gridding it in my report, but I did reference both those sales. Even so, the adjustment is subjective, this is not one for slide rules. I’m not concerned about a witch hunt, the client is a local lender, paper will be in house and if there are any questions the bank VP will call me. Also, the borrower is a 3rd generation dog doctor who owns 4 clinics, the loan is a low LTV so it’s as low risk as a loan can get….that satisfies my inner underwriter. Now on the adjustment, because I “feel” it is warranted and supported. I know you excel geeks who spend 4 hours per report for adjustments will disagree, but many adjustments we make in the real world have a large degree of subjectivity based on prior reports, assignments, market knowledge and how buyers and sellers react in the market, buyers don’t typically use excel spread sheets to determine if a house is ugly or how much their offer should be. With that being said, I hope the bank doesn’t sell the loan to BOA and run it through PCV and hot spot.