Client asking for specific data on appraisal

[Dublin ohio]

Yeah, I think for a long time folks just got away with the canned, "Sensitivity analysis was used to extract zzz adjustment." When, in fact, they had no clue what sensitivity analysis really was/is... Now, folks are getting called out. I know nothing about OP or his analysis capabilities, but I do see a lot of folks getting called to task for saying they used zzz technique, when it's obvious in the analysis that they didn't.

My grid usually explains the story as long as they read the commentary.

 

[Terrel L. Shields]

"Sensitivity analysis was used to extract zzz adjustment."

Guessing has a downside, right? I mean, it saves hmm, 5 minutes? 10? But if you don't do it, then you never see how it dovetails with reality. And I find lots of data sets (3 comps, 4, whatever) vary even in similar houses. So, one may be $50/SF and another $65/SF

 

[Tom D]

But that's not the Fannie way. They want proofs, not support, and certainly not heuristic knowledge from 20-30 years in real estate.

Well dam, mr exact adjustment proofer. My heuristic approach has not gotten me one request to explain my adjustments. I know you never were a residential sales person who had to pay attention to the buyer's hot buttons, no i mean their matched pair discussions when showing listings. Oh, the hours discuusing depreciation with them and regressing the whole group.

The fannie CU way is the group thought about any adjustment. Never a word about matched pairs or depreciated costs. The appraisal book says all the ways you should do it, but none of them are perfect. And when you can't proof it exactly, use you experience.

And by the way, avm can't account every $ exactly for every adjustment. At the end of it, it leaves a total dollar amount that it coulnd't figure out where it goes.

 

[jay trotta]

Snippet:
Yet his recent comments, since going viral, have reignited the debate over remote work, its social impact and whether older generations (Galloway is 58 years old) are out of touch with the challenges and choices of Gen Z.

The Galloway fallout
Galloway has some fair points. Relationships are the currency of a successful career, the professor has argued on his podcast and in media appearances. He’s also expressed concerns about the rise in loneliness and decline in mental health for young people.

Yet mental decline can be just as attributable to stress from micromanagement in the office, for example. As Galloway’s comments went viral on TikTok, as users on the platform pushed back on the professor’s comments, focusing on the economic climate and costs associated with commuting.

Guess he never looked into the appraisal services work area over time, or he wouldn't have limited the comments to Gen Z

 

[Tom4value]

"Let's see. That house is 2,245 square feet and sold for $zzz,zzz. This house I am looking at is 1,960 square feet, 285 square feet smaller. At $46/sqft, I will lower my offer by $13,110."...Said no buyer of a SF, owner-occupied house, EVER!

Sure, buyers of commercial property do this all the time and x/square feet is right up there with income as the most important factor of a price. However, when families look at houses, they may glance at the square footage on the MLS sheet but their main motivation is, "this house looks a little bigger than the other one. Whattaya say, Hon, offer $10,000 more?"

My point is, only residential appraisers, and to a lesser extent, listing brokers, put heavy emphasis on a sqft GLA adjustment. Sure, we have to because it is the best way to gauge what a buyer is thinking and if you have enough data, eventually you will find a notable pattern to get a reasonable, supportable range. Yet, ironically, the more we worry about how accurate our number is, the further we get from actually gauging buyer's motivations.

 

[Terrel L. Shields]

And by the way, avm can't account every $ exactly for every adjustment. At the end of it, it leaves a total dollar amount that it coulnd't figure out where it goes

Regression analysis has a 'left over' amount that is unaccounted for by the MLR, too. This is an older townhouse comp MLR

they may glance at the square footage on the MLS sheet but their main motivation is, "this house looks a little bigger than the other one. Whattaya say, Hon, offer $10,000 more?"

Or they might try to judge on the listing price as the Realtor is very likely to price a home based upon its size

 

[Tom4value]

Regression analysis has a 'left over' amount that is unaccounted for by the MLR, too. This is an older townhouse comp MLR

View attachment 90618


Or they might try to judge on the listing price as the Realtor is very likely to price a home based upon its size

Regression analysis has a 'left over' amount that is unaccounted for by the MLR, too. This is an older townhouse comp MLR

View attachment 90618


Or they might try to judge on the listing price as the Realtor is very likely to price a home based upon its size

Absolutely. That is why I included listing brokers. Their data is the same data we use, based upon what past buyers did.

Don't misunderstand. I am not saying this data/method is "wrong" or "useless". Indeed, it is the best way to anticipate what buyers will do. I am saying that buyers don't use regression analysis. They use "what they feel". In the end, the best statistical method is really just a best guess. Do your best work but don't sweat it. Your reconciliation is the best tool you have.

 

[Terrel L. Shields]

I am saying that buyers don't use regression analysis.

No. But the buyers do make up a data pool which regression can often decipher into a consistent pattern. Geese have no real concept of why they fly in V shaped flocks, but there is an underlying reason no matter the goose does not understand aerodynamics.

 

[djd09]

you could have ask bruce lee how he did it...but it wouldn't compute

 

[George Hatch]

The purpose of the adjustments is to refine the range and reduce the amount of subjectivity it takes to reconcile for a value conclusion. Not to overfit the range down to the last $100 whether those are the reactions in the market or not. The SFR market is the most imperfect market there is in RE appraising.

The dominant unit of comparison for commercial/industrial/office is usually the price/sf *except* when the buildings are so small that the buyers revert back to using the sale price itself (same as the SFR appraisals). 640sf storefront on its own lot vs an 850sf storefront on the same sized lot is usually going to show bigger differences in the price/sf than in the sale price itself.