Contract, New Construction

[Tom D]

1-2% adjustment is like deciding what value a small patio has. when i sold real estate you would be surprised at what buyer liked the most, their hot button. there are nuances in sales that you are not aware of because you aren't involved in that sale. hey, you certainly looked for a difference, but such small adjustment is kinda like ansi, to the .10th. too much precisness denotes an expertise that may not really exist. but that is a business decision. the lender told you about your business decision. you do it, or find a more tolerable lender.

 

[J Grant]

A cash sale has nothing to do with a concession.

 

[David S]

1-2% adjustment is like deciding what value a small patio has. when i sold real estate you would be surprised at what buyer liked the most, their hot button. there are nuances in sales that you are not aware of because you aren't involved in that sale. hey, you certainly looked for a difference, but such small adjustment is kinda like ansi, to the .10th. too much precisness denotes an expertise that may not really exist. but that is a business decision. the lender told you about your business decision. you do it, or find a more tolerable lender.

Yeah, a side note for a small item, like air conditioner, fireplace or small patio, etc., how you guy do the adjustment? Normally I put $3000-$5000 on it. But if lender want me provide pair analysis, it will be almost impossible because there are no exact same two houses in the world, you can't tell less than 1% value difference is because of air conditioner, fireplace or small patio, etc., If you didn't put adjustment there, lender will ask you again: Why you didn't put adjustment there? These items have to have some value on it, right? Seems you didn't do a good work to analysis, blah, blah.

1-2% adjustment is like deciding what value a small patio has. when i sold real estate you would be surprised at what buyer liked the most, their hot button. there are nuances in sales that you are not aware of because you aren't involved in that sale. hey, you certainly looked for a difference, but such small adjustment is kinda like ansi, to the .10th. too much precisness denotes an expertise that may not really exist. but that is a business decision. the lender told you about your business decision. you do it, or find a more tolerable lender.

 

[Terrel L. Shields]

A cash sale has nothing to do with a concession.

It means there are no real "concessions" in a sale... but the concession is a nothing burger in the SUBJECT - only an issue in a comp. OP seems to be having a problem differentiating between the Comp and Subject concessions.

Yeah, a side note for a small item, like air conditioner, fireplace or small patio, etc., how you guy do the adjustment? Normally I put $3000-$5000 on it.

Just by pulling it out your .....?

If you cannot support the adjustment with a paired sale or perhaps sensitivity, then state "insufficient market evidence to support an adjustment" and provide a general observation in the reconciliation. "I felt Comp X had additional amenities over Comp Y therefore, it was more similar to the subject and I gave additional weight to Comp X. "

Making small adjustments is needless and can be misleading. If you are making more adjustments than necessary it is pointless and if you are making 10-20 adjustments in the grid, then your numbers statistically are simply a random number generator being generated non-randomly by your skew.

I've yet in 30 years to make an adjustment for porch, deck, style, etc. I found a better comp, or I simply ignored it. So, when I started doing multi-linear regression, I discovered that even a fireplace is nigh impossible to isolate numerically. I rarely adjust for more than four differences. Land -value, first and foremost; outbuildings, pools, etc.; and finally size and effective age (condition-age). If that doesn't tighten up the grid, then I need better comps.

 

[David S]

It means there are no real "concessions" in a sale... but the concession is a nothing burger in the SUBJECT - only an issue in a comp. OP seems to be having a problem differentiating between the Comp and Subject concessions.

Just by pulling it out your .....?

If you cannot support the adjustment with a paired sale or perhaps sensitivity, then state "insufficient market evidence to support an adjustment" and provide a general observation in the reconciliation. "I felt Comp X had additional amenities over Comp Y therefore, it was more similar to the subject and I gave additional weight to Comp X. "

Making small adjustments is needless and can be misleading. If you are making more adjustments than necessary it is pointless and if you are making 10-20 adjustments in the grid, then your numbers statistically are simply a random number generator being generated non-randomly by your skew.

I've yet in 30 years to make an adjustment for porch, deck, style, etc. I found a better comp, or I simply ignored it. So, when I started doing multi-linear regression, I discovered that even a fireplace is nigh impossible to isolate numerically. I rarely adjust for more than four differences. Land -value, first and foremost; outbuildings, pools, etc.; and finally size and effective age (condition-age). If that doesn't tighten up the grid, then I need better comps.

Agreed. What if you can't find better comps since right now sales volume is very low ? Especially GSE have strictly restriction for the comps, like 1/2, 1 or max 2 miles radius, GLA within 20~25% +/-, sold day in last 3 or 6 months, etc.

 

[Terrel L. Shields]

Especially GSE have strictly restriction for the comps, like 1/2, 1 or max 2 miles radius, GLA within 20~25% +/-, sold day in last 3 or 6 months, etc.

Please show me in the Selling Guide or 4000.1 where those are requirements...perhaps some idiot lender has those additional requirements, but they are not in the selling guide. And if a client so confines me that I am unable to comply, then I reply that the restrictions make it impossible to do a credible job therefore, I withdraw from the assignment.

 

[David S]

So far, I only find this: https://quizlet.com/617274281/quiz-09-sale-comparison-approach-to-value-flash-cards/. It says: . "If the gross adjustments are greater than 25 percent of the sale price of the comparable, it is likely not a comparable" So if the comp GLA difference is too large, most likely will blow out that 25% range.

 

[Terrel L. Shields]

So far, I only find this: https://quizlet.com/617274281/quiz-09-sale-comparison-approach-to-value-flash-cards/. It says: . "If the gross adjustments are greater than 25 percent of the sale price of the comparable, it is likely not a comparable" So if the comp GLA difference is too large, most likely will blow out that 25% range.

Might be an old test question. I am assuming you are fairly new. But we older appraisers do remember when FNMA mandated within one mile and gross adjustments not to exceed 25%, 10% max adjust etc. Like you said you do have to use what you actually have. But FNMA only requires you to explain why you went further afield or further back in time, or why you used a smaller or larger house. As for 90 say sales, that's basically a liquidation sale but over the years closings that used to take 30-60 days now only takes a couple of days to couple of weeks. So technology has proven the vehicle that overtakes past requirements by events.

Also note - Skippy the appraiser - can use large GLA comps to make small SF adjustments. So a $20/SF allows for a much easier "comp" by picking comps based upon price first and using the SF adjustment to keep it nice and tight - when in reality the much larger or smaller comp is probably lower quality / higher quality, or older/newer, respectively.

 

[Dublin ohio]

Agreed. What if you can't find better comps since right now sales volume is very low ? Especially GSE have strictly restriction for the comps, like 1/2, 1 or max 2 miles radius, GLA within 20~25% +/-, sold day in last 3 or 6 months, etc.

Well that would eliminate 75% of my rural appraisals. It would even eliminate a few suburban appraisals. I have a pud just up the street from me that is over 2 miles distant from the northern to southern edge. If I am at the northern edge. The next closest competing pud is over 2.5 miles away

 

[David S]

Well that would eliminate 75% of my rural appraisals. It would even eliminate a few suburban appraisals. I have a pud just up the street from me that is over 2 miles distant from the northern to southern edge. If I am at the northern edge. The next closest competing pud is over 2.5 miles away

That's true. The reality is depends on market area.