Formula - to Adjust GLA ?

[Metamorphic]

Look at tabs on bottom, 4 different worksheets

• 3 sales,
• 4 sales,
• 5 sales,
• 6 sales

.

Very nice solution to that problem.

Extra excel sheets are free.

 

[GARY TRENT]

I downloaded Metamorphic's spreadsheet, entered the GLA and sp, but when I move to the right the numbers continue to increase with each column. I tried playing with the adj/sq ft but doesn't seem to matter. I know nothing about spreedsheets and it shows. Am I doing something wrong?

 

[Metamorphic]

That's Riick's spread sheet. But for this method to work you MUST have GLA bracketed. IOW, there must be at least 1 comp with superior and 1 with inferior GLA to the subject. I'd bet that's your problem.

 

[Mike Lamson]

That's Riick's spread sheet. But for this method to work you MUST have GLA bracketed. IOW, there must be at least 1 comp with superior and 1 with inferior GLA to the subject. I'd bet that's your problem.

I have the same issue with the spreadsheet, Max-Min increases on a linear scale as the Adj/SF increases even if the GLA is bracketed as indicated.

 

[Terrel L. Shields]

However, even Ratterman in this book speaks of a possible method for deriving adjustment factors ...Some appraisers use a percentage of the average dollar-price-per-square-foot of gross building area including land as a baseline adjustment. For example, many appraisers would use 30% to 40% of the average of these sale price ratios...

Perhaps that explains why our state investigator zinged someone arguing that the SF adjustment should be 40% of the RCN??

The whole point of the SCA is that the market is rational and that the difference in prices between two or 20 properties is a result of the collective value of the differences in amenities

The problem is that markets are not rational. The issue of the SF adjustment is complicated by the other adjustments and the size thereof.... However, I would argue that if you go to the plainest sales in a catagory, and perhaps subtract out the land value from the sales price that the sensitivity analysis might be a little "tighter"...

I've tended to use MLR to test for what is driving value. Again, remember the market is pretty non-rational. So the fewer adjustments the better. I'd rather search for more similar sales further away and further back in time. That's not the "fannie way" but I personally think it is far more accurate than simply picking the nearest 3 sales. I am not convinced that proximity to a sale makes as much difference as similar age, size, and condition.

 

[Metamorphic]

The problem is that markets are not rational.

I dont disagree, but if you dont accept that there is some rationality an predictability at work you're TU on 2 of the 3 approaches to value.


Its just like in geology where you have to make assumptions of lateral and vertical homogeneity even though you know its probably not true, because if you didn't make that assumption, you'd have to turn the whole world over so you can see the other side before you had enough data to do anything with.

 

[Terrel L. Shields]

if you dont accept that there is some rationality an predictability at work

Perhaps the better word is an "imperfect" market. A "perfect" market might be the price of gold which is based on actual trades within a very narrow range of value.. But houses, individually are very high variability and even model matches have a wide variation based solely on view, location, and even the way it blends into the environment. An adobe style home in Teague, NM, will sell a lot differently from one located in Teague, Texas.
The issue then becomes just how "tight" is the range of possible values. I don't know what the "average" house looks like. No one has ever defined it. But I know that I have a much higher chance of being 'right' in a cookie cutter subdivision than vetting a rural home that has been modified, added on, has a barn, a shop, 10 acres, and a swimming pool.

Sensitivity analysis beats no analysis and your spreadsheet reflects that even if it is not going to capture every nuance of a given dwelling.

 

[Metamorphic]

Perhaps the better word is an "imperfect" market. A "perfect" market might be the price of gold which is based on actual trades within a very narrow range of value.. But houses, individually are very high variability and even model matches have a wide variation based solely on view, location, and even the way it blends into the environment. An adobe style home in Teague, NM, will sell a lot differently from one located in Teague, Texas.
The issue then becomes just how "tight" is the range of possible values. I don't know what the "average" house looks like. No one has ever defined it. But I know that I have a much higher chance of being 'right' in a cookie cutter subdivision than vetting a rural home that has been modified, added on, has a barn, a shop, 10 acres, and a swimming pool.

Sensitivity analysis beats no analysis and your spreadsheet reflects that even if it is not going to capture every nuance of a given dwelling.

I totally agree with you there.

The guy that trained me turned a narrow range of adjusted values into a fetish. He'll spend an inordinate amount of time tweaking adjustment rates (another way of saying sensitivity analysis) to narrow the range....sometimes till you're looking at all the comps coming in within a percent of one another. A couple of time's he's sensitivity analyzed till he got everything to the same number rounded to the nearest thousand.

My thought has always been that a little of that sensitivity analysis is a good way to refine a gross adjustment that you got from some other source....essentially tuning the adjustment to the specific circumstances. But that at some point it ceases to be a productive effort in terms of modeling the market. At some point you've left the market behind and its just a mathematical game.

I think its worthwhile for an appraiser to know this trick, because the marketplace for appraisals really likes gridded numerical analysis and tight ranges, but I think a good appraiser should be equally effective doing a the whole job qualitatively.

 

[CaliforniaNative]

I believe you must also have a wide enough range of $Adjustments per SF.

 

[Riick]

Prettier Version

Here's that spreadsheet again, but now prettied up & no searching,
calculates adjustment to nearest $1 up to $250/ft and displays it .

The file is set as "read only"; to save it, you HAVE to change the name,
((....123 SW Main St, 19xxx )) and the original never gets changed.
That trick has saved me from destroying a template more than once.