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Date of sale/time adjustment on 1004 UAD compliant report

The Scholar

Thread Starter
Freshman Member
Joined
Feb 13, 2021
Professional Status
Licensed Appraiser
State
Colorado
Does anyone know what the correct procedure is for calculating the time adjustment on the 1004? My issue is that the form only gives the month/year and not the actual date.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
Does anyone know what the correct procedure is for calculating the time adjustment on the 1004? My issue is that the form only gives the month/year and not the actual date.
Time is NOT not adjusted by days but by months. Also each month is not the same you may have one month where it was 2% and the next month may be 1/4 % etc. My method is to try as hard as possible to use sales dated within 90 days and use Pending sales as an-indicator of the strength of trend. The trick is to get some percentage you can apply that will take into account the increase or decrease and to smooth it out so that one particular months doesn't act as an-outlier. In high cost areas where I work a 2 month price increases may not be reflective of what had transpired over the entire 12 month period. so on median sales prices at 600,000. I try very hard to not to make any time adjustments on any sale that is 90 days or less. Not a hard rule but my Pending Sales DOM and-the Listings Days on market should indicate and support the overall upward-downward trend.

A Simplification : On your 1004-MC draw an-Arch from the PRIOR 7-12 Months over to the Current-3 Months-- Example: Prior-7-12 months $358,000-Current-3 Months=$379,000 over 12 month period. I set aside and Ignore the middle Prior 4-6 month time period -because its absorbed into the arch-drawn from Prior-7-12 months and Current-3 month. In this example : The trend is increasing and indicates an-approximate 5.9% or rounded to 1/2 % per month because its easier to place 0.5% per month in my software.

Note: Some appraisers teach and believe a better method is to adjust based upon the sales contract or pending sale date and not closing date. Their theory is the event happened when the buyer and seller agreed to accept the offer at that price. Also remember we adjust the comparables not the subject , believe it or not we see this in reviews sometimes and the same with seller paid concessions.

Good-Luck I know and yes I know this is an-over simplification and not perfect methodology but its one that rarely gets any push back and it works.
 
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