Looking for your opinion on adjustments

[J Grant]

So a tacit endorsement by a senior executive at Fannie carries no weight?

It can, however, the poster said "This is what they want, " as if it is a fact/requirement.

 

[djd09]

sounds like you didn't hit a number...

 

[Dublin ohio]

It can, however, the poster said "This is what they want, " as if it is a fact/requirement.

9 out of 10 appraisers will take it as "fact"

 

[Terrel L. Shields]

Over-improvements suffer from "functional depreciation" so that gets addressed with an adjustment on the functional utility line of the grid

USPAP only requires you to address the accrued depreciation. You do not have to address the functional or external obsolescences. However, the contributory value of an item that suffers an obsolescence such as pools or outbuildings often do invite you to make some commentary.

 

[Mike Ault]

USPAP only requires you to address the accrued depreciation. You do not have to address the functional or external obsolescences. However, the contributory value of an item that suffers an obsolescence such as pools or outbuildings often do invite you to make some commentary.

My post was simply to chime in on the "different SF adjustment variable for different comparables" discussion. That's not typical practice, and in the "SF driven" residential world, leads to appraisals which make properties appear more conforming to their market than they really are. Functional utility adjustments are the most legitimate way to recite over-improved properties and reflect the "law of diminishing returns" on the grid. The appraisers using the former approach love it however, it keeps their adjustment percentages lower than they should be but to my knowledge nobody has issued guidance saying it is unacceptable practice.

 

[Tim Hicks (Texas)]

When all we get are the oddball rural assignments most adjustments have little support because there just isn't enough data. When you have to drive 10-15 miles for a similar 60 year old remodeled home sale, typically everything else is not similar (lot size, improvements-barns, workshops, GLA, bath count, bedroom count, etc.).

 

[sputnam]

USPAP only requires you to address the accrued depreciation. You do not have to address the functional or external obsolescences. However, the contributory value of an item that suffers an obsolescence such as pools or outbuildings often do invite you to make some commentary.

"Accrued depreciation' includes depreciation from all sources. Not just the physical depreciation.

USPAP doesn't mention 'accrued depreciation'. It mentions 'depreciation' in Standard Rules 1, 5, and 7.

 

[ZZGAMAZZ]

There is a situation where you could have a GLA adjustment of $100 for one comparable and $175 for another - that would be in a tiered market. Your 3000 square house competes in a tier of similar sized homes - say 2500 - 3500. But if a lack of data forces the use of a 4900 GLA house. This 4900 GLA is in a different tier of overall prices that "gap-up" well above the the $100 per adjustment you supported in the subject tier. The "gap-up" doesnt support the $100 adjustment - it is $100 plus a premium for being in a different tier. I've seen appraisals with the same $100 GLA adjustment to the 4900 sqft house that ends up adjusting high relative to the comps in the subject's GLA tier. There is a reason it is adjusting high - the GLA difference did not account for the 'gap-up" in the pricing structure. If you look for it, you will see it.

I sometimes wonder why the embedded SCA software adjustment factors--only absolutely or percentage-- for lot size and GLA, dont include a sliding scale of sorts that would calculate for diminishing returns, which are mentioned above.

 

[Tom D]

If you have accounted for 'all' the differences on the grid, the GLA adjustment should be only 1 number across. If you have a GLA adjustment tier, you got the wrong comps, or missed an adjustment for some other difference. If i saw that as a reviewer i would look for a good explanation. Unfortunately no, CU will go crazy with different GLA adjustments. CU looks at what all the other appraisers do, and they don't do what you just did. So it will ding you, and i agree with it. You will get a higher bad grade CU score. So beat your head against the wall everytime you do that, cause it will be dinged wrong each time. Not a smart business decision.

As a past r.e. broker, you even have my selling head confused with you thought here. A sliding scale involves more than 1 point of reference, and we currently have nothing to prove that, or even explain why there is. Buyers don't use a sliding scale, they buy the hot buttons. In being too precise, you open yourself to be proven not an expert.

 

[J Grant]

Peer practice is a standard in USPAP to ensure that appraisers are applying similar, proven, and accepted methodology. It should be such that a property would be appraised for a similar $ value opinion by different appraisers. When that is not the case, the field disintegrates. It means any appraiser can just make up or use some formula or adjustment they want and therefore the value opinion would be widely different even on a conforming property. We saw that in the biased cases, a second appraiser magically produces a very high value on a property. I just saw it in a poor appraisal I was given for a conforming mid-price-range property that was hugely overvalued, using terrible comps with a crazy land adjustment.

The argument is a unique property needs a unique solution. Actually, that is not true. An exceptional property needs more research and time finding the right comps or land values etc. - it might mean bigger adjustments and further out in area or back in time. It can mean using a concept such as over-improvement or super-adequacy. These solutions are part of the appraisal methodology and exist to be applied to the problem-child cases.