Location adjustment

[Mike Ault]

I do not expand the area for 1004MC. It's only use is an analysis for a trend in market.
1004MC should stay in same neighborhood.

Fixed it for you.

 

[Fernando]

Fixed it for you.

If you don't have enough data in same neighborhood, 1004MC can not give credible results.
Either state 1004MC not applicable or expand neighborhood in which you can get a trend. That's what a real appraiser would do.

 

[Lindseyw]

I think that’s why appraising is called an ‘art.’ Sounds like you’ve got the experience and the geographical knowledge to know when you should be adjusting….I’d go with historical market extraction

 

[The Bob]

Would it not be an attribute of the location which is reflected in the value of the site? To me the land value is a fixture of the site...it can change but does not depreciate. Therefore, if vacant, its value reflects its location and view therefore, is incorporated into the land value. That means I never (with rarest exception) adjusted for "Location" and I have never adjusted for "View". To me they are incorporated into the land value.

I've seen real world cases where a favorable view had a higher impact on value than just the difference in land values between a lake font lot and one across the street.

 

[Tom D]

i don't make some guess adjustments if the value works for everyone. too much thought process to prove what? especially if the adjustment is small compared to the value.
obvious adjustments have to be made. you can also explain that there isn't enough data to determine that affect on value, but you are considering it in the final conclusion. never had a problem.

 

[Salty]

I make location adjustments all the time since I never have enough sales in the same development / neighborhood. Agents hate it, especially when they provide me a comp that supports contract price, but homes in that comp's development have consistently sold for 15% more than the subject's development over the last several years. I use a combination of grouped data sets comparing average and median prices, excluding extreme outliers, and matched pairs of the homes are reasonably similar. I do not like to use just one pair or one grouped data set. If I have too little data for an adjustment I deal with it on a qualitative basis. That said, for some reason when I see other reports they rarely have location adjustments when I think they should be there. Appraisers here do not like making them. Maybe it requires too much actual appraisal work. Of course lately these locational differences are less significant as buyers are whacked out and still willing to pay anything for housing. What inflation, what rate hike?

I want to add this. I do think that if I don't make a location adjustment and contract price is supported, no one will ever know. Unless a reviewer takes the time to do the research and reconstruct the location comparison, which I think is doubtful. I think most reviewers would just glance at it. Wa'lah, over-valued home. Just as it takes time to properly appraise it takes time to properly review. I never do reviews b/c the fee is never worth the hassle.

 

[Terrel L. Shields]

values between a lake font lot and one across the street.

Again, that value should be reflected in the value of the lot. Here a lake shore lot will bring a lot more than a lake view lot and if the lake shore lot doesn't have the potential for a dock, it's worth a whole lot less. To me that is not a location issue, rather the value of the site.

 

[Terrel L. Shields]

In nondisclosure states land purchases

Yes, that is a Texas problem, NM, MO, KS - big PITA. But which one lot below is lakeside and which are lake view? Pretty easy to spot the difference in these lot sales.

 

[sputnam]

Usually location adjustments are easy to extract from market data. It really isn't rocket surgery.