It is my impression that Austin's issue is that the SF adjustment should be made FIRST and then fill out the rest of the form...or fergiddit entirely on the other adjustments of minor import.
Wheras (based on actual case study consisting of watching over folk's shoulders) most users tend to do the grind top to bottom or in some fairly consistent 'other' manner, and then go back and tweak the SF Adj until the grid 'looks pretty' :roll:
Which may not be that far off (mentally) from what real buyers do in the REAL market!
Once you have chosen the features which you think, and hopefully the market reflects, affects value, the adjustments can be made individually, or you can lump any and all into one adjustment. The problem is double dipping. If you adjust for a bathroom or bedroom, then adjust for SF, you risk adjusting twice for the same feature.
I agree with Pam. I look at everything else first (unless I am confident with the market), then the sales will dictate the square footage adjustment. If there's a wide range, then that tells me to take another look at my other adjustments.
That being said, I just reviewed a report where the appraiser adjusted each sale at 50% of the gross sale price per foot for size. The net effect was that when a home sold for $120 per foot gross (including land, pools, etc), he would adjust at $60 per foot. You end up adjusting twice then when you adjust for pools, etc. Suffice it to say, he ended up way off on the value estimate. I just wonder who taught him to do that.
Loan officer sent me a copy of appraisal done last week by a certified general for VA which was about $10k below the contract value. Said since they couldn't go VA, they were converting to conventional and could we do it? Okay, but if this guy with all those years of experience couldn't make it work...........
Maybe he just had a bad day.
Anyhow, (subject is 30 year old block in average condition, 1500 GLA) his square foot adjustments ranged from $10/sf for a comp 250 sf larger to $455/sf for two comps 2 (two) sf smaller. I didn't try to figure out his formula.
And he liked Terrel's idea of double dipping, too!
Once I discovered his subject photo's were not of the subject I sorta chalked it up to the bad day theory.
Hope Phil has figured out the prevailing system for sf adjustments. There'll be a test on Friday.
Theoretically, shouldn't the GLA adjustment be exactly equal to the depreciated cost per square foot, as shown in the Cost Approach? In real life, the adjustment derived from sales data usually comes out to about 1/3 to 1/2 of that amount. Occasionally, but not often, the adjustment approaches the full depreciated cost.
When an appraiser adjusts for GLA differences in brand-new $100/sf properties at $45/sf, (the market isn't returning the full cost of the additional space) doesn't that imply functional obsolescence?
I'm open to the idea that my logic might be screwy, but where? (The answer could have something to do with decreasing returns on GLA above an optimum size, except that I've seen lots of data that conflicts with that concept, too.)
To answer the "prevailing system"question:
Appraiser's System #1: $35/sf for every appraisal.
Appraiser's System #2 (preferred): The number between $25 and $75, rounded to the nearest $5 that evens out the Adjusted Sales Prices.
The System used by Buyers and Sellers: "I'll pay a lot more for the bigger house as long as I can still qualify for the loan."
The only problem with that theory is that the depreciated cost per foot includes several of the additional features that you have adusted for in the grid outside of the GLA.
I think like many have said, there is no "stock" number. I usually, like many have said, adjust for most items and look at my spread. I then "play" with my adjustments. Those that use Appraiser's Toolbox can tell you the "auto adjustment" tool is pretty neat for this. I look at what are the biggest differences in the proeprties on the grid, then set up the adjustment tool to look at larger and smaller adjsutments and watch my spreads. There can be no set numbers for anything.