Looking for your opinion on adjustments

[sputnam]

There are more than 30 recognized methods for extracting adjustments from market data. The best ones in any particular case depends on what is being adjusted and on what data is available to you for the assignment. I agree with the chief appraiser. The price per square foot includes influences on price from all sources. It's double (or more) dipping. I disagree that all adjustments must be the same across the grid. They might be... but, there are situations where that wouldn't be the best approach.

 

[Non Sequitur]

Here's what they want, endorsed by the GSEs. IIRC it's $80 per month:

 

[Fnbpos]

There are more than 30 recognized methods for extracting adjustments from market data. The best ones in any particular case depends on what is being adjusted and on what data is available to you for the assignment. I agree with the chief appraiser. The price per square foot includes influences on price from all sources. It's double (or more) dipping. I disagree that all adjustments must be the same across the grid. They might be... but, there are situations where that wouldn't be the best approach.

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.

 

[J Grant]

Here's what they want, endorsed by the GSEs. IIRC it's $80 per month:

View attachment 105756

Please stop spreading false information. "They " do not necessarily want True tracts, or any such system. It is one of a number of methods that can be used - like any other method, how well or how poorly an appraiser uses it matters.

 

[J Grant]

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 find this less than credible. It is bad for an appraiser to use a 4900 sf house as a comp for a 3000 sf subject. It's better to go back in time for a more similar Sf. But if one needs to use such a vastly different sf that is selling in a different price tier, it is articial imo to compensate by making a different price per sf to make up for what you call a gap up in pricing - if the sf adjustment is the same price per sf, then it is a big adjustment and explain - (or throw out the sale. ) It might be that the sale neds a location or other adjustment to narrow the gap.

There are unusual situations when a different price per sf for a comp might be needed, but imo an appraiser's poor choice of a comp isn't one of them.

 

[J Grant]

Adjustments reflect contributory value, rather than a rote formula for sf

When the comps are very different from the subject, the result will be a wider adjusted range of values. So be it. Analyze why one or two comps deserve the most weight rather than doing strange things to artificially close the value gaps. If a subject is truly unusual, this is what happens. Or the subject can be an over improvement or under improvement or a super adequacy - artificially tweaking adjustments to mask it is not the purpose of an appraisal.

 

[Terrel L. Shields]

What i mean is market data finding a selection of comps with all the same features, with a pool.

I am going to do an extraction on every comp. That should tell you what the pool contributory value is. Then adjust accordingly. A cheap 18x9 pool isn't the same as a pool with 72 x 36 dimensions, a change room, underwater lighting and heated.

As for SF, use sensitivity (as mentioned above) it's easy

 

[Mike Ault]

Adjustments reflect contributory value, rather than a rote formula for sf

When the comps are very different from the subject, the result will be a wider adjusted range of values. So be it. Analyze why one or two comps deserve the most weight rather than doing strange things to artificially close the value gaps. If a subject is truly unusual, this is what happens. Or the subject can be an over improvement or under improvement or a super adequacy - artificially tweaking adjustments to mask it is not the purpose of an appraisal.

Over-improvements suffer from "functional depreciation" so that gets addressed with an adjustment on the functional utility line of the grid rather than a different "price per SF" adjustment on the GLA line of the grid. That's way it's obvious to all readers of the report that you recognized the over improvement and discounted the contributory value accordingly instead of trying to make all the sales appear more comparable by employing smaller GLA adjustments for the nonconformity.

 

[Surf Cat]

What i mean is market data finding a selection of comps with all the same features, with a pool...then another population with exactly the same features less a pool

I'm having a hard time following your logic...... it sounds as if you're searching for comps by price to me as opposed to searching for comps that are most similar to the subject.

 

[Dublin ohio]

Please stop spreading false information. "They " do not necessarily want True tracts, or any such system. It is one of a number of methods that can be used - like any other method, how well or how poorly an appraiser uses it matters.

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