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Condition Adjustment in same designation

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
"The Grid.." Call it the adjustment table and it won't sound so scary. +'s -'s, half-steps, etc. baaa. Just make the adjustment and explain it in the narrative section. If the client/intended user(s) don't read the narrative then tough toenails.

...


Condition adjustments, if any, reflect my estimate of market reaction to costs needed to make a comp similar to the subject. I have observed the comparable properties from the street (to the extended that improvements can be seen from these heavily wood sites; observed MLS photos, including interior phots; and, read agent public and confidential remarks in order to estimate the differences in condition.

Quality adjustments: None needed as the subject and all comparable sales and listings are of reasonably similar quality.

Lot Size: Small variances did not warrant an adjustment as typical lots all have similar utility, topography and views for the most part. Based on analysis of unimproved lot sales as well as improved properties, over time, there is a small market reaction to these larger lots. $10,000 downward for lot sizes of about an acre vs. typically sized residential lots is indicated.

Some items, such as fireplaces, half-baths or “powder rooms,” landscaping and variances in decking and patios did not require adjustments. The market is not sensitive to bedroom counts between 2 and 3 bedrooms with the possible exception of those properties which lend themselves well to vacation rental properties. Adjusting for both bedroom differences and GLA differences would have the potential for “double adjusting.”

The comparable properties used in this report were the most reasonably similar, recent and proximate sales but did require some adjustments. Ideal comparable sales are not available due to the lack of conformity in this area and the limited number of transactions in any given year.


Comments on the Comparable Properties:

Comp 1: 38471 Friendly Ave Relatively recent closed sale located near the subject off Pacific Woods Rd. Smaller GLA with 2 bedrooms and one bath; similar lot size but sloping site; similar age and quality. Although C4 condition, the kitchen and baths are likely original and overall condition is slightly inferior to the subject's C4 condition. Single car carport vs. the subject's oversize two-car detached garage. No additional features. Conventional financing, 271 days on market, 15% net/gross adjustments and a MV indication of $369,000 which represents the upper range of adjusted MV indicators.

Comp 2: 38180 Ocean Ridge Dr Slightly dated sale but very proximate to the subject property. Smaller lot, but no adjustment required as it has similar, residential utility. Barn or farmhouse architectural design, about 1,400 sf of GLA (estimated); 3 bedrooms and 2 full baths. More recent updating than the subject and a downward adjustment was made based on my estimate of market reaction to costs. Similar two-car, detached garage. Conventional financing, 178 days on market, 3% gross adjustments. MV indication of $360,000 which represents the lower range of indicators.

Comp 3: 45640 Pacific Woods Rd Very recent sale of a property in close proximity to the subject. Smaller, log construction single family residence with 3 bedrooms and one full and one half bath. Superior condition but still within the C4 category. Based on MLS interior photos I have estimated market reaction to costs at about $10,000. Similar size lot and topography. 2 car, attached carport required an upward adjustment for the subject larger garage. Built in storage area considered more or less an equal amenity to the subject enclosed porch. Cash sale, 146 days on market, 5% gross adjustments, adjusted MV indication of $365,000. This indicator is bracketed by comps 1 and 2.

List Comp 4: 46650 Fish Rock Rd Active listing of an A-Frame or Chalet style residence on a 1-acre site. The MLS listing suggests two units, but there is only one structure. The loft area of the A-frame includes a second kitchen and interior access. It's likely it is marketed this way to enhance potential as a vacation rental. For purposes of comparison, I consider it a single-family residence. Two units are not permissible in the Coastal Zone. Q4 condition rating but inferior to subject's condition (inferior updating and exterior maintenance as well as a large deck in need of repair or replacement) and an upward adjustment was made. GLA is estimated as there are no records available from my data source and the listing office has a policy of not reporting living area. This property has been on the market for more than a year and is likely over-priced. I have made a downward 5% adjustment for sale to list price statistics. I have made a $10,000 positive adjustment to the larger, 1 acre lot based on my analysis of both improved and unimproved lot sales as well as experience this market. A 10% upward adjustment was made for market reaction to A-frame design vs. conventional designs. Possible MV indication of $258,000, which is within the same range as the closed sales presented. Possible MV indication of $345,500.

List Comp 5: 37811 Ocean Ridge Dr - This is an active listing that I debated including in the adjustment table due to it's unfinished remodel which must be completed by a new owner. I did not photograph the property but I have observed it many times over the years, as recently as about a month prior to the effective date of this appraisal (it is at the corner of Old Stage Rd & Ocean Ridge Rd, can't be missed when turning on to Ocean Ridge and I often use their driveway to turn around or to organize comp inspection routes while completing assignments on Ocean Ridge.) I have included the MLS photo. This listing is primarily relevant for it's similar GLA, room and bath count, 2 story design, shingle siding and close proximity. The residence fronts Ocean Ridge Rd, but the side yard abuts Old Stage Road which can result in some noise during the daylight hours. The property was purchase several years prior as an REO and the new owner started a major remodel which was never completed. No floor coverings, incomplete interior wallboard finishes, incomplete kitchen and baths. It appears that the siding at the rear of the residence has been removed but not replaced. I have estimated a positive $25,000 adjustment as market reaction to condition versus subject's condition. The property does not have a garage but does have some modest outbuildings (storage.) I have made a downward 5% adjustment for listing status based on current statistics. Possible MV indication of $366,000.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I prefer making a separate line item adjustment on grid when comps differ in their C or Q ratings due to upgrades, components.other that merits an adjustment .....imo is easier to see what and why -, but however an appraiser does it, will need explanation and commentary. I have never had an UW, reviewer or fannie CU come back saying doing it that way is "wrong".
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
Agree with that. Although once in a while the quick check they do will miss the comments and they'll ask about it.
 

Ariba

Senior Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Colorado
The rating should not be selected on a relative basis, meaning it is not selected on how the property relates or compares to other properties in the neighborhood. Additionally, the Condition and Quality ratings for comparable properties must be made on an absolute basis (again, each comparative property on its own merits), not on a relative basis, and reflect the property as of the date of sale of that comparable property.
What?
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
I prefer making a separate line item adjustment on grid when comps differ in their C or Q ratings due to upgrades, components.other that merits an adjustment .....imo is easier to see what and why -, but however an appraiser does it, will need explanation and commentary. I have never had an UW, reviewer or fannie CU come back saying doing it that way is "wrong".
It seems ridiculous to make separate line item adjustments for upgrades (quality) when there is a line for this adjustment. You have to explain the adjustment either way, so why not on the appropriate line? Some appraisers confuse quality (upgrades) with condition (updates or new). It is perfectly acceptable to have the same quality rating, but require an adjustment. For example, a new tract subdivision where one home has hard wood floors and granite counter tops and some do not. This would require a quality adjustment and not a condition adjustment as they are both new. It does not necessarily raise the home from Q4 to Q3, but it is a market supportable adjustment for quality. It is very simple to understand the concept if you relate it to new home appraisals. Again, why complicate things with a separate line when there is a line designed for that adjustment. You have the explain the adjustment either way. It just seems logical to use the proper line designed for these adjustments.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
In other words, it's not "average" compared to other houses in the neighborhood. Or C3 (compared to all the others.) Objective, not subjective.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
It seems ridiculous to make separate line item adjustments for upgrades (quality) when there is a line for this adjustment. You have to explain the adjustment either way, so why not on the appropriate line? Some appraisers confuse quality (upgrades) with condition (updates or new). It is perfectly acceptable to have the same quality rating, but require an adjustment. For example, a new tract subdivision where one home has hard wood floors and granite counter tops and some do not. This would require a quality adjustment and not a condition adjustment as they are both new. It does not necessarily raise the home from Q4 to Q3, but it is a market supportable adjustment for quality. It is very simple to understand the concept if you relate it to new home appraisals. Again, why complicate things with a separate line when there is a line designed for that adjustment. You have the explain the adjustment either way. It just seems logical to use the proper line designed for these adjustments.
Quality is the whole of the house, the architecture and building materials as a holistic total, as opposed to upgrades or remodeling , both of which which can be additional to homes having otherwise equivalent building and architectural quality.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
Holistic Total? I thought we weren't allowed to discuss religion here.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Integrated whole then lol !
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
Quality is the whole of the house, the architecture and building materials as a holistic total, as opposed to upgrades or remodeling , both of which which can be additional to homes having otherwise equivalent building and architectural quality.
I figured that part went without saying, but the upgrades or remodel of two similar quality homes would effect the quality differences as well as the condition of the home. Again if you reduce to new home differences, a home with upgrades is not newer than a new home without upgrades. However, the upgrades are part of the quality equation of the home.
 
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