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Location adjustment

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DeKay Bayliffe

Sophomore Member
Joined
Oct 16, 2006
Professional Status
Certified Residential Appraiser
State
Alaska
I'm appraising a home in a neighborhood that is known for it's drug trafficking and run down properties. The sujbect is on the outside of the subdivision, but still will not bring in as much as if it were elsewhere. Does anyone have any good advice on how to explain...without violating USPAP? Thanks
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
How do you know it will not bring in as much as if it was elsewhere?
 

Michigan CG

Moderator
Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
Cite police statistics. As for the run down properties, put 6-10 pictures in a photograph addendum and include it as part of your neighborhood analysis.
 

Smokey Bear

Elite Member
Joined
Dec 8, 2004
Professional Status
Certified Residential Appraiser
State
California
Just demonstrate the value differences from your market analysis.
 

Hamlet

Elite Member
Joined
Aug 14, 2006
Professional Status
Certified Residential Appraiser
State
Ohio
I would also use the market adjust you were able to derive for the locational adjustment on your grid as part of your explanation. That is evidence also that there is a negative influence without violating the PC police.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
if you use comparable properties which are located within the same or neighborhoods with similar appeal as the subject property, then would be no need for any adjustment. Tread very carefully here, lest you be accused of redlining or worse. As far as citing police crime statistics, what good does that do? If you are making a location based adjustment for a comparable property from a different neighborhood, you extract the amount of the adjustment from difference in sales prices between that neighborhood and the subject's neighborhood, not from the differences (if any) in real or perceived crime rates. Remember, you are an appraiser, not a sociologist. Just report the facts as far as market values are concerned. If similar properties in comparable neighborhood 1 have a median sales price which is 10% more than similar properties in the subject neighborhood, just make a 10% adjustment and explain that property values are 10% higher in the competing neighborhood and how you made this determination. There is absolutely no need to get into differing crime rates, etc.
 
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