How To Calculate GLA Adjustments?

[Mike Kennedy]

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?

"One of the most common deficiencies in residential appraisals reported by licensing agencies, underwriters, and reviewers is the lack of support for adjustments in the sales comparison approach. This book assists residential appraisers in supporting adjustments with logic and consistency." Mark R. Rattermann, MAI, SRA, Author
https://www.appraisalinstitute.org/valuation-by-comparison-residential-analysis-and-logic/

 

[Joe Flacco]

I find that condo unit SF adjustments include the land value for the unit.

 

[Sbps30]

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.

Thanks. Have to try this.

 

[Sbps30]

"One of the most common deficiencies in residential appraisals reported by licensing agencies, underwriters, and reviewers is the lack of support for adjustments in the sales comparison approach. This book assists residential appraisers in supporting adjustments with logic and consistency." Mark R. Rattermann, MAI, SRA, Author
https://www.appraisalinstitute.org/valuation-by-comparison-residential-analysis-and-logic/

Looks like something worth buying. Thanks.

 

[Michigan CG]

If I were the original poster I would but every book by Mark Ratterman, MAI I could find. Value By Comparison was not his best book.

 

[jay trotta]

If I were the original poster I would but every book by Mark Ratterman, MAI I could find. Value By Comparison was not his best book.

Why did you Stop there; which would you recommend for the OP ??

 

[residentialguy]

You could always message UC for his list. I think he's updated it with some of the forum member adjustments they post, so the comp's adjustment will be accurate someplace in the country.

 

[ucbruin]

You could always message UC for his list. I think he's updated it with some of the forum member adjustments they post, so the comp's adjustment will be accurate someplace in the country.

@residentialguy

"I found that the better I got at appraising, the less I made quantitative adjustments. The less you make quantitative adjustments, the harder it is to find fault. My advice...don't make small adjustments that you can't fully and unequivocally support. There is no requirement to have a "tight range" using quantitative adjustments"

Defensive CYA appraising....
Preamble to the ResGuy Book of Adjustments and Non Adjustments!!!

************************************************
@raychrist
"Price per square foot / 3

= 1/3
of the Price per SF and the adjustment should be within 1/3 to 2/3 so you multiply this amount by 2 to get 2/3 (Since we are trying to determine the amount a buyer would pay for larger rooms, which is a lesser cost than adding kitchens and baths, the lower end of the range is determined.

Using a Comparable sale that sold for $200,000. If the subject property has a site value of $40,000 but this comp has a superior site value by $5,000, this means this comps' site value is $45,000. Assuming a GLA of 2,000 SF, the calculation for the first method would be:

EXAMPLE:

$200,000 (Sale Price) - $45,000 (Site Value) = $155,000 paid for the improvements
$155,000 2,000 SF $77.50 for every square foot purchased. (Including kitchens and baths)
$77.50/ 3 = $25.83 (1/3 of the amount paid for every square foot of improvement purchased."

I recall the bank having a similar guideline regarding GLA $/sf....

 

[residentialguy]

Defensive CYA appraising....

Just havin a little fun with ya, cupcake. But regarding your reaction to my post, yes, I like making adjustments that I can defend because they are clearly supported by the market. I'll leave the non-supported little list adjustments, and your exact down to the penny ($25.83) adjustments for you to support.

 

[Terrel L. Shields]

There is a strong relationship between the GLA contributory value and the markets reaction to surplus GLA. But to me it isn' t necessarily straight line . In fact, seems to be a hyperbolic curve. With sufficient info and time, I think some good graphic curves could be developed... but would have to be adjusted with time.