Book or resource for supporting adjustments

[The Bob]

Sometimes the adjustment is staring you in the face. Look at your comps and ask "why did this one sell for less/more than the others".
You can also use depreciated cost. This works well if the feature is fairly common in your market. Think a pool in Florida. You can also use DC to allocate among 2 or more features.
I'm also a big fan of using group sales data. The trick with that is to isolate one feature as best you can.

 

[Meandering]

I don't know think residential books work for commercial, depending upon the main types of commercial work you are training them for.

Something residential easy as location, becomes more complicated for commercial, and you have to tell trainees to recognize the different uses that are differently impacted by the same location. Which also helps determine the H&B, beyond the typical Residential consideration of SFR, Res or Commercial.

So in comparing the big commercial building that could be a warehouse, or an office building, or a retail building, or a manufacturing site, the adjustments for the location must be considered for not just access from the roadway, but visibility, public transportation accessibility, weight limits for trucks - which might restrict tractor trailer deliveries, traffic light considerations so access is considered from multiple directions, without causing traffic jams. Existing access to any high need of water/electric or other power source if manufacturing is needed. Also the type of use will determine if the bulk amount of people coming to the site will be consumer/customers/clients or employees. That consideration is needed because the location adjustment considers the access to "the market" the commercial enterprise needs to access. So in a manufacturing circumstance, you want to know that your employees are not traveling an hour or two to get to work, and that community surrounding the plant will be accepting of the wages paid for those position. This is why there aren't any underwear manufacturers in silicon valley. Even though everyone in silicon valley owns or (?) wears underwear, the pay checks of the workers is not sufficient for the employees to survive there and the price of the underwear can not be raised to accommodate the wages needed for those workers to live there. And it's the same considering of why there aren't multi-story office buildings in rural locations.

There are lots of different variants for location and other physical features impacting value, than must be considered with residential properties.
It is much more involved than what is presented to Res appraisers or even addressed in Res appraising books, which is one reason why you won't find an overall commercial orientated book for all adjustments.

It's best to take each different property you are appraising and address it, along with any special considerations of what does or does not impact the value of similar properties with similar uses, than it is to try and address everything all at once.

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[tsiegel]

I don't know think residential books work for commercial, depending upon the main types of commercial work you are training them for.

Something residential easy as location, becomes more complicated for commercial, and you have to tell trainees to recognize the different uses that are differently impacted by the same location. Which also helps determine the H&B, beyond the typical Residential consideration of SFR, Res or Commercial.

So in comparing the big commercial building that could be a warehouse, or an office building, or a retail building, or a manufacturing site, the adjustments for the location must be considered for not just access from the roadway, but visibility, public transportation accessibility, weight limits for trucks - which might restrict tractor trailer deliveries, traffic light considerations so access is considered from multiple directions, without causing traffic jams. Existing access to any high need of water/electric or other power source if manufacturing is needed. Also the type of use will determine if the bulk amount of people coming to the site will be consumer/customers/clients or employees. That consideration is needed because the location adjustment considers the access to "the market" the commercial enterprise needs to access. So in a manufacturing circumstance, you want to know that your employees are not traveling an hour or two to get to work, and that community surrounding the plant will be accepting of the wages paid for those position. This is why there aren't any underwear manufacturers in silicon valley. Even though everyone in silicon valley owns or (?) wears underwear, the pay checks of the workers is not sufficient for the employees to survive there and the price of the underwear can not be raised to accommodate the wages needed for those workers to live there. And it's the same considering of why there aren't multi-story office buildings in rural locations.

There are lots of different variants for location and other physical features impacting value, than must be considered with residential properties.
It is much more involved than what is presented to Res appraisers or even addressed in Res appraising books, which is one reason why you won't find an overall commercial orientated book for all adjustments.

It's best to take each different property you are appraising and address it, along with any special considerations of what does or does not impact the value of similar properties with similar uses, than it is to try and address everything all at once.

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I agree with everything you said here. Although, it does not at all seem impossible for SOMEONE (someone smarter than me) to write a book on the subject. It is true what someone else on this thread has said that all the textbook examples are half useless as they demonstrate how to do a paired sales analysis on two hypothetical properties that are the same with the exception of the one element that the text is demonstrating how to isolate. That scenario simply does not exist in commercial real estate in my market. We are needing to make several adjustments before we can isolate the one characteristic in which we are attempting to find an adjustment for through paired sales analysis. It would be really helpful to have a book, template, cheatsheet or whatever that runs through the various techniques to isolate property and support adjustments. I have started such a cheatsheet internally, but it feels important enough for there to be a class on the subject or at least a book. Maybe both!

 

[Meandering]

I agree with everything you said here. Although, it does not at all seem impossible for SOMEONE (someone smarter than me) to write a book on the subject. It is true what someone else on this thread has said that all the textbook examples are half useless as they demonstrate how to do a paired sales analysis on two hypothetical properties that are the same with the exception of the one element that the text is demonstrating how to isolate. That scenario simply does not exist in commercial real estate in my market. We are needing to make several adjustments before we can isolate the one characteristic in which we are attempting to find an adjustment for through paired sales analysis. It would be really helpful to have a book, template, cheatsheet or whatever that runs through the various techniques to isolate property and support adjustments. I have started such a cheatsheet internally, but it feels important enough for there to be a class on the subject or at least a book. Maybe both!

The AI has multiple books.

But those books are all segregated by the uses, Office, Retail, yada, although they really used to like the office uses, but maybe that'll be changing to solar and wind farms.

So, because each "commercial" use can be uniquely different in physical and economic needs that impact values, you should know already from you're own experience, that each use should be addressed as a learning and text book opportunity, which is why some appraisers appraise farmland, some do hospitals, some appraise commercial docks and transportation hubs, some specialize in hospitality and large resorts and some just like the small mom and pop mixed uses on main street.

You have to define the scope limit of the commercial work you are training employees for, and then recommend those AI books that deal with those types of uses.

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[Fernando]

This is the Fernando Way.
For each appraisal, I adjust differently for different location.
Using most recent appraisal in similar neighborhood, I would do the adjustments using the old appraisal adjustments as a baseline.
I do a lot in similar areas so based on a sales appraisal with its adjustment, I can follow along similar line and do appropriate adjustments for current market conditions.

 

[KHS445]

Sounds like an authorship opportunity for someone.

I recommend Burt and suggest the title ”Analysis to the Point of Paralysis“.

 

[TerryRohrer]

Though geared toward residential sales analysis, the best book I have seen about regression analysis in appraisal is by David Braun. He had a software package at one time, too, but it doesn't appear to be available any longer. Eugene Pasymowski has RealStat, a software package, and a few articles in the wild. I have not used it, but I think Terrel Shields has, so maybe he can chime in.

Edit: The RealStat website has a page listing books, including https://AI.appraisalinstitute.org/e..._prd_key=EBD4DE0B-4CF2-40CE-8DD7-7483C598DEE3

The Valuation Analyst: Research in Extracting Adjustment Rates: Braun, Mr. David A: 9781534810792: Amazon.com: Books

The Valuation Analyst: Research in Extracting Adjustment Rates [Braun, Mr. David A] on Amazon.com. *FREE* shipping on qualifying offers. The Valuation Analyst: Research in Extracting Adjustment Rates

www.amazon.com

RealStat - Econometric Solutions for Real Estate Appraisal

 

[Zephyr999]

Thanks. I will take a look at those. I was hoping for something that was more in line with commercial valuation just because getting into income based adjustments seem important. Maybe this is a good place to start though. Thanks again!

I believe what you seek is in AI book...
Real Estate Appraisal Practice, A Collection of Examples

 

[Artemis Fowl]

Perhaps an alternate/additional method:

Have them observe some tax appeals. Open to public usually. Seeing the attorneys (if they are any good) pick apart an appraisal report is very educational regarding supporting what you say in a report. Higher stakes generally produce a greater level of questions for the appraisers. I just watched one for a mall appeal. Hundreds of questions about the reports.

 

[Elliott]

My first AI instructor was an old salt and he had a pure theory of appraisal. He use to practically shout at the class that after you inspected the property you should go across the street, sit down on the curb and ask yourself, "How in the hell am I going to appraise this?" And he insisted that each time, with each property you should go through the same process. My interpretation over the years is that you try to figure out what the 'market' is trying to tell you. Some techniques are math, some are an interpretation of the behavior of the market, different markets see features differently. It is not an exact science.