Do you review adjustments?

[Salty]

I have a question for those that do a lot of review work. I choose not to do review work, but I do see many reports that are sent to me for various reasons.

My question is 3 parts and concerns adjustments:

When you are reviewing reports do you look for support for the adjustments you see on the grid? Do you recreate the adjustment on your own to see if the adjustment is reasonable? If there is no support, do you ask for support?

I suppose I am wondering how one determines if the adjustment is reasonable.

The reason I ask is because of the reports I see I really think close to 100% of them just have adjustments in the grid with no support contained within or attached to the report. I mean no real explanation as to how the adjustment was derived. With some of the reports I have viewed, I feel like if I was a reviewer I would want to see the data that lead to some of these adjustments. I also see many times where adjustments are necessary and they are not there. I recently posted in another thread about a report I saw where the adjustment was applied in the wrong direction. (software error I guess). But never caught.

Currently I include adjustment data sheets with my reports illustrating how I derived adjustments for larger items such as GLA, location, etc.. At times I also use illustrations to prove no adjustment is necessary. Never had a report come back for an adjustment issue. That said, before I started doing this, I also never had a report come back for an adjustment issue either.

There are several things leading me to these questions which are probably topics for other threads later or have already been discussed. I spend a great deal of time on my adjustments – supporting every one. It takes the most time and is the heart of the appraisal. Given what I see, and I could be wrong, but it seems like many do not take the time to properly derive adjustments or half *** it to turn out more reports.

If reviewing these adjustments does not include any real analysis, and if that is the norm for reviews in our industry, I might be better off applying numbers that look good and stop spending so much time on detailed support. I suppose I am trying to see if I can find ways to compete with the ones that work for low fees once rates start to increase and demand drops.

 

[Mejappz]

According to some on the Forum, adjustments are worthless but rounding to one-tenth of a foot is paramount. Yeah, I'm starting to think of dusting off my old "book of adjustments" and going from there.

It seems that's what Fannie/Freddie wants. Look on the bright side. Now you will get to see pretty little floor plans. Forget if you should have made a 100K adjustment for going out of the neighborhood; it's all about pretty pictures and floor plans.

 

[residentialguy]

I have a question for those that do a lot of review work. I choose not to do review work, but I do see many reports that are sent to me for various reasons.

My question is 3 parts and concerns adjustments:

When you are reviewing reports do you look for support for the adjustments you see on the grid? Do you recreate the adjustment on your own to see if the adjustment is reasonable? If there is no support, do you ask for support?

I suppose I am wondering how one determines if the adjustment is reasonable.

The reason I ask is because of the reports I see I really think close to 100% of them just have adjustments in the grid with no support contained within or attached to the report. I mean no real explanation as to how the adjustment was derived. With some of the reports I have viewed, I feel like if I was a reviewer I would want to see the data that lead to some of these adjustments. I also see many times where adjustments are necessary and they are not there. I recently posted in another thread about a report I saw where the adjustment was applied in the wrong direction. (software error I guess). But never caught.

Currently I include adjustment data sheets with my reports illustrating how I derived adjustments for larger items such as GLA, location, etc.. At times I also use illustrations to prove no adjustment is necessary. Never had a report come back for an adjustment issue. That said, before I started doing this, I also never had a report come back for an adjustment issue either.

There are several things leading me to these questions which are probably topics for other threads later or have already been discussed. I spend a great deal of time on my adjustments – supporting every one. It takes the most time and is the heart of the appraisal. Given what I see, and I could be wrong, but it seems like many do not take the time to properly derive adjustments or half *** it to turn out more reports.

If reviewing these adjustments does not include any real analysis, and if that is the norm for reviews in our industry, I might be better off applying numbers that look good and stop spending so much time on detailed support. I suppose I am trying to see if I can find ways to compete with the ones that work for low fees once rates start to increase and demand drops.

Reviews typically are 2 possible SOWS. If you review it and value is all good, you send it in. Minor corrections are fine.
If the value is bad, then you do your own appraisal with your own adjustments on top of the review. That of course is a greater fee that gets charged... essentially a review plus your own appraisal. Make sure you let the client know that a greater fee will be necessary if that happens.

 

[Dublin ohio]

Reviews typically are 2 possible SOWS. If you review it and value is all good, you send it in. Minor corrections are fine.
If the value is bad, then you do your own appraisal with your own adjustments on top of the review. That of course is a greater fee that gets charged. Make sure you let the client know that a greater fee will be necessary if that happens.

Always request original report before I quote on reviews. Takes about 10 minutes to determine how far I will have to go. Looked at one the other day. Value was within a "reasonable" range at first glance. But the appraisal was very sloppy. They were obviously using auto adjustments and had their threshold set way too low. $1800 site adjustment, $830 GLA adjustment. Adjustments in general looked "off" or missing due to the wide adjusted range for a suburban pud. That I was familiar with. The must not have liked my fee. Because I never heard back.

 

[J Grant]

At one time I did a fair amount of review work m ( stnd 2 field reviews ) though in recent years only a few a year and now almost none - pull up a field review 2000 form and read it . Only one section asks about adjustments, after the section that asks about comp selection. Every reviewer is different just as every appraiser is different, so some I assume might be fussy about if an adjustment was extensively supported while others less so.

I personally believe the heart of an appraisal is the comp selection. If the comps are bad, but the adjustments are meticulous, with bad comps the value is still going to be off/not supported. So both in my own work, and when reviewing, I would spend a great of time analyzing what sales were used as comps, and which ones were not used , (and why.).

Imo, if the right comps are well chosen, the reviews almost write themselves. That is to say, with good comp choices, using simple but effective techniques like paired sales extraction or line item sensitivity analysis, translates to the applied adjustments will narrow down the range. The adjustments should be in proportion to the price range of the properties as well as cost of items. The appraiser's statement explaining adjustments or how derived was of less importance ( to me, ) Because it is readily apparent on the grid if an adjustment is bad , meaning it is not proportionate to the feature or defect, or it throws the values off, or it does not narrow the values down. Same goes for a factor which needed an adjustment, yet none was applied.

It sounds like you are doing a great job! Up to each person how much time they take and how much support they need to show or method used to feel comfortable.

 

[Terrel L. Shields]

the heart of an appraisal is the comp selection

Bingo.

 

[Amy Perkins]

I have a question for those that do a lot of review work. I choose not to do review work, but I do see many reports that are sent to me for various reasons.

My question is 3 parts and concerns adjustments:

When you are reviewing reports do you look for support for the adjustments you see on the grid? Do you recreate the adjustment on your own to see if the adjustment is reasonable? If there is no support, do you ask for support?

I suppose I am wondering how one determines if the adjustment is reasonable.

The reason I ask is because of the reports I see I really think close to 100% of them just have adjustments in the grid with no support contained within or attached to the report. I mean no real explanation as to how the adjustment was derived. With some of the reports I have viewed, I feel like if I was a reviewer I would want to see the data that lead to some of these adjustments. I also see many times where adjustments are necessary and they are not there. I recently posted in another thread about a report I saw where the adjustment was applied in the wrong direction. (software error I guess). But never caught.

Currently I include adjustment data sheets with my reports illustrating how I derived adjustments for larger items such as GLA, location, etc.. At times I also use illustrations to prove no adjustment is necessary. Never had a report come back for an adjustment issue. That said, before I started doing this, I also never had a report come back for an adjustment issue either.

There are several things leading me to these questions which are probably topics for other threads later or have already been discussed. I spend a great deal of time on my adjustments – supporting every one. It takes the most time and is the heart of the appraisal. Given what I see, and I could be wrong, but it seems like many do not take the time to properly derive adjustments or half *** it to turn out more reports.

If reviewing these adjustments does not include any real analysis, and if that is the norm for reviews in our industry, I might be better off applying numbers that look good and stop spending so much time on detailed support. I suppose I am trying to see if I can find ways to compete with the ones that work for low fees once rates start to increase and demand drops.

If I do not agree with the value and the adjustments I might use their comps along with my own and readjust them as supplemental, rejecting their value opinion and giving it my own opinion.

While there is no "standard" for adjustments, locational and market adjustments are represented in terms of percentages but show a dollar amount. There are standards and guidelines where one would need additional explanation if guidelines are exceeded above 10% for the line item of the total sale, but it's better to adjust and explain than not to adjust for something that does affect value.

If I agree with their value but not their adjustments, I will show the math in the addendum of how I would have adjusted the sales to come to the same value conclusion.

Sometimes I was able to import the original report into my software and readjusted them the way I normally do it

Sometimes I will add a sale to bracket the feature the original appraisal did not have to give it the support.

It's better to get more comps so you bracket everything, but if you can't explain it or in the addendum compare two sales in a different market with that feature in the addendum. This is a paired analysis for something you can't bracket and you don't need more pictures to do this.

If the value is very close, I will probably agree with it.

If the value is significantly off, I will not agree with it.

What is significant? 10% usually considered significant, but it needs to be the truth.

 

[Terrel L. Shields]

First, I make an adjustment based upon the value of each site "as if vacant and available for its highest and best use"- there is no "obsolescence" and land adjustments therefore are dollar for dollar adjustments. Outbuildings then need accounted for and often I do that by cost related analysis and extraction.

Next the two factors I will vet are age and SF. I use sensitivity in a dual analysis based on effective ages then that leads me to an adjusted value to do the SF sensitivity. Once those 4 items are "done" I rarely have to deal with anything else. Location, view, and quality are items I go years between needing to make an adjustment for. I choose my comps to avoid those issues first and foremost.

 

[sputnam]

1- Yes. I expect to find some comments that summarize the support for adjustments. I don't expect the appraiser to provide a detailed analysis.. Something similar to... 'GLA adjustments were extracted from market data using paired sales analysis and deprecieated cost analysis.'

2- Depends. If the adjustment appears reasonable and the support comments make sense... then, usually not. If an adjustment looks forced, is unsupported, seems too high or too low, or is out of line with adjustments to other comparables... then, maybe. But first, I re-read the comments to make sure I didn't miss a perfectly rational and reasonable explanation. Then, if it seems warranted..... yes. At least enough analysis to see that the appraiser's adjustment is within a range indicated by market data. I never hold an appraiser's feet to the fire because he/she settled at the bottom of the range of adjustments that can be supported when I think it should be in the middle.

3- Again... it depends. In some reviews, I have the power to send the report back to the appraiser for revision. In others, I have no contact with the appraiser. I report to my Client and the Client may, or may not, ask the appraiser to revise.

 

[Joyce Potts]

It's not so much about the dollar amount of the adjustment(s), it's about the explanation as to how they were derived. While I personally may not support adjustments that way, I can't take issue with someone who does it differently and explains it, albeit something extreme and out of the ordinary. I've gone from multi-linear adjustments BACK TO paired / matched sales. I'm far more comfortable with matched / paired sales in most cases, especially when my comparable sales' adjusted selling prices return a narrow range.