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How To Calculate GLA Adjustments?

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Sbps30

Sophomore Member
Joined
May 22, 2013
Professional Status
Licensed Appraiser
State
California
I was wondering how other appraisers determine the GLA adjustments on single family and condo appraisals. I have been using general adjustments according to the region. Recently I got a letter from Fannie Mae saying that I can't have general adjustments for all my appraisals in the region. How do you all come up with appropriate adjustments for GLA and do you have to do research for every appraisal you do?
 

Tom Woolford

Elite Member
Joined
Nov 20, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I use Aggregate sales analysis (which generally is unreliable but all rocks have to be turned over) as well as paired sales analysis. This will get me in the ball park, and sensitivity analysis on the grid will get a final number. Generally I don't bother with small adjustments as they are statistically insignificant, and even larger differences sometimes don't really have a statistically significant result. I know some appraisers feel compelled to make an adjustment for GLA regardless of how large or small it is. But if potential buyers don't seem to give a crap about a 100s.f. difference, than why should I. There is such a thing as being overly accurate, and it generally isn't credible.
 

residentialguy

Elite Member
Joined
Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
I use Aggregate sales analysis (which generally is unreliable but all rocks have to be turned over) as well as paired sales analysis. This will get me in the ball park, and sensitivity analysis on the grid will get a final number. Generally I don't bother with small adjustments as they are statistically insignificant, and even larger differences sometimes don't really have a statistically significant result. I know some appraisers feel compelled to make an adjustment for GLA regardless of how large or small it is. But if potential buyers don't seem to give a crap about a 100s.f. difference, than why should I. There is such a thing as being overly accurate, and it generally isn't credible.
:clapping: :clapping: :clapping:
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas

Digger88

Elite Member
Joined
May 11, 2010
Professional Status
Certified Residential Appraiser
State
Virginia
a friend of mine got the same letter as every report she did was at $55 psf. gotta change that up to stay ahead of the man!
 

NachoPerito

Senior Member
Joined
Jul 25, 2012
Professional Status
Certified General Appraiser
State
Washington
We have a formula.

Simplified, it is the following:

Average sale price of comps minus average land value of the comps divided by average Bldg SF of comps then multiple by 57%

Or more simplified:

Hey, the comps are selling for around $600k, land values are about $200k, comps are around 2500 SF, so the adjustment is $91/SF

We got the 57% ratio from a study of new home developments and analyzing the different sized plans within the development.
 

Digger88

Elite Member
Joined
May 11, 2010
Professional Status
Certified Residential Appraiser
State
Virginia
We have a formula.

Simplified, it is the following:

Average sale price of comps minus average land value of the comps divided by average Bldg SF of comps then multiple by 57%

Or more simplified:

Hey, the comps are selling for around $600k, land values are about $200k, comps are around 2500 SF, so the adjustment is $91/SF

We got the 57% ratio from a study of new home developments and analyzing the different sized plans within the development.

looks good but what do you do for condos?
 

NachoPerito

Senior Member
Joined
Jul 25, 2012
Professional Status
Certified General Appraiser
State
Washington
looks good but what do you do for condos?

We will estimate the land value ratio based on age and location of the condos. Almost always between 20% and 50% of the sale price.
 
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