GLA Adjustments

[ucbruin]

Doesn't everyone stick to a reasonable range????
Of any adjustment....

 

[Joyce Potts]

I hope so.

 

[Meandering]

Condition differences are based on MLS photos and comments when available. Adjustments are based on a combination of AVT Multi-Linear Regression, Aggregate Comparisons, Matched Pairs, Sensitivity and/or Trend Analysis with no two approaches returning consistent results with adjustments deemed 'reasonable'. While not always 'strongly' independently supported, collectively, the adjustments serve to narrow the adjusted value range of the comparables in support of the subject's 'most probable selling price' commensurate with the definition of Market Value set forth herein. Regression is a better indicator of the final value 'range' and less supportive of the contribution of the independent variables. Any regression model is not weighted into the final value opinion, rather is merely a supplemental tool used to cross-check the reasonableness of the results of Sales Comparison Approach or other approaches to value.

The purpose of making adjustments to the sale prices of the comparable sales is to minimize the economic differences considered to be attributable to the physical characteristics, market conditions, rights conveyed and any favorable financing. Unadjusted Sale Prices varied between X% low to high, adjusted sale prices vary less than 1% indicating that the adjustments made are supported by the data and are suitable for analysis as all value considerations were bracketed.

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[Fritz in NY]

I wish I had that opportunity. I cover 12 counties in Upstate NY. 1 hour drive from my office, have done so for 30+ years. Everything is different.....
For those who know it all, and can define a real GLA adj. godspeed.

 

[Deleted member 128537]

I live in a very non-conforming area. The way I would explain it is that after 20 years of experience and doing hundreds of appraisals (nay thousands)I have found that the $ adjustments made for this type of property tend narrow the adjusted values of the comparable sales. This is commonly called sensitivity analysis. After talking to other appraisers in the area this $ amount is consistent (not exact) with their adjustments. Due to the large variance in the market it is not possible to do regression analysis or matched paired sales analysis.

That’s something of what I would say. And there is nothing wrong with using what other appraisers in the area do. That’s what sensitivity analysis does. Heck I’ve asked experienced real estate agents what they think something is worth in the market when the do CMA’s. Again that is using whatever data you can to come up with some sort of credible analysis. I don’t know if you ever compare your adjustments to others. It’s one way to find out if I’m out of whack with what my colleagues are doing. And it’s amazing how everyone comes up with the same general figures! Must be something to this “experience” stuff.

 

[Artemis Fowl]

What part of my post did you not understand?

There was no part that I didn't understand. I merely wanted to know how he actually did it (in order to better answer his question) rather than explain how I do it.

 

[Joyce Potts]

For non conforming properties or in areas where comparables are lacking, no approach or methodology is going to work with a high degree of accuracy. No one every suggested otherwise. My original verbiage is specific and also mentions trend and sensitivity analysis. You can only use and analyze what you have and keeping information as to what your peers are doing is better than nothing.

The Appraising Residential Properties, 4th Edition, Appraisal Institute, "Other Quantitative Adjustment Techniques”, Page 344 further states:

“…In instances where paired sales analysis is not conclusive, the appraiser may apply judgment to resolve the problem." The adjustments resulting from the appraiser's judgment is based on a study and understanding of historic or past buyer preferences. It further suggests that cost and depreciated cost data may be used with the appraiser arriving at the value contribution (not cost new) of certain features. In effect, the sales grid found in most any pre-printed residential reporting form affords every appraiser a convenient 'paired sales format' and should make pairing the sales very easy. Yet, when comparing two appraisals done by two different appraisers for the same property—seldom are the adjustments the same."

Support for adjustments is based on multiple applications and rarely do two methods return identical results with a high degree of accuracy. This is due in part to any given data set and window of time. Such things as a property's ‘condition’, ‘effective age’ and external influences are not always accurately reflected in the data sampling and can be a weakness in any adjustment analysis. In addition, the data set may be flawed due to inaccurate or omitted data initially entered by the listing Realtor with the accuracy of the data assumed to be correct, but can not be guaranteed. The process of supporting the contribution of individual variables (features) is limited and often difficult to quantify, with adjustment deemed to be qualitatively supported unless otherwise addressed. All methods of supporting adjustments are usually limited by inherent uncertainties within the applications themselves.

 

[ucbruin]

Ahhhhh.....

The "Good Book"....

 

[Deleted member 128537]

Ahhhhh.....

The "Good Book"....

It is amazing how many underwriters have never read the “good book.” Try putting “experience” and “judgment” into a report as a basis of making an adjustment! You will be tarred and feathered. I just got done appraising an atypical property with a probable $3 million site. They wanted data on this very atypical site with waterfront; in other words they wanted a sale similar to the site. I said there is none. That’s the point of being atypical.

 

[Joyce Potts]

Unfortunately, there are appraisers out there who are on their soap box that using 'good judgement' and years of experience is both a USPAP and FNMA violation. It's either mathematical support or nothing.

If the market data is out there, I get it - but there are those properties that you're never going to have a strong support market support or evidence of a range, much less a dollar amount for an adjustment.