Market areas and Market Trends

[Non Sequitur]

Well, that didn't take long. Here's one solution being offered in forums:

Market Condition Analysis - Aloft's Appraiser Toolkit

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[TerryRohrer]

It's crazy to think adjusting comps 1% and 2% makes any kind of sense. But the trend is, and I have said it before, in the near future we will be adjusting for everything whether we like it or not. Every software vendor is baking in artificial intelligence for photo recognition that will not only evaluate the report's photos but will scan the internet for the comps' photos and compare them. I have heard multiple times how the software is able to point out granite vs quartz, backsplash vs no backsplash, 1990s painted cabinets vs 2010 shaker cabinets, 10x15 patio vs 15-25 patio, brick vs stucco vs hardy board vs vinyl, etc. Every physical data point will be scanned by the AI software, and to the extent photos for comps are available on the internet (or from prior reports in a database-think appraisal portals scanning and keeping photo info for future use) those will be scanned too. The expectation is appraisers will have to acknowledge every difference and adjust, or as the "A zero adjustment is an adjustment" crowd has been pounding on we will have to explain the lack of an adjustment.

I agree. My view is that the extreme data collection will be accumulated into condition and quality ratings that are then treated as measurable differences. That is, differences in ratings will be treated as if they are identical to differences in square footage. That cumulative garbage will be input to CU, garbage will ensue, and appraisers will be held to the task of proving CU wrong, but will never be allowed to see how the rotten sausage was created.

 

[Tom D]

Part of the expectation in the new uad is the ability to put in² charts and graphs that are visual aids. in my appraisal, from the MLS, i show a 5 county market quaterly prices, a 1 year prices change, a 1 year listings price changes, a 1 yr zip code prices, and my own year quaterly graph of the neighborhood prices changes.

Why do i do this. So 3 years from now i can look at any report and see what the market was doing. I use visual aids instead of more words in a 30 page report. It breaks up the monotony of reading 30 pages of only words.

It looks like i took more thought to do those pretty charts.

 

[TerryRohrer]

It looks like i took more thought to do those pretty charts.

I had an employer once who spoke at length about his "unearned credibility." Since he didn't have any that was earned, I have tried to avoid that approach!

 

[Mark Sargent]

I want to retire

 

[Surf Cat]

View attachment 93406

I was taught by one of my mentors that your comps 1 to 3, are your primary comps, the meat and potatoes, where you're going to hang your hat on. For example, if I had a dated sale of 18 months and it was pertinent to my indication of value, I would move it up into the number 3 slot, next to the most recent sales, and explain.

Why would I have comparables 1 and 3 which are approximately 9 months old, as my primary comps and the most recent sale, comparable number 4, on the back page of the SC grid?

Maybe it doesn't matter to some of you. But to me, it just doesn't make sense.

Ideally, I want no time adjustments on comps 1 to 3 which reflects the current market.

 

[TerryRohrer]

My comps are always ordered most recent first, nearest the grid labels, whether for commercial, ag, or residential. That simplifies making all other adjustments and then creating a quick chart that shows adjusted price vs sale date, allowing another test for trends and rates of change. All else equal, I would weight the most recent sales most heavily, but keep all on the table until reconciling.

 

[Surf Cat]

My comps are always ordered most recent first, nearest the grid labels, whether for commercial, ag, or residential. That simplifies making all other adjustments and then creating a quick chart that shows adjusted price vs sale date, allowing another test for trends and rates of change. All else equal, I would weight the most recent sales most heavily, but keep all on the table until reconciling.

Right? That's why that graph looks bass aackwads!

 

[The Bob]

I've had cases where I indicate an overall increasing market but don't adjust some of the comps. Classic case is using comps from the active spring market for a sale late in the selling season. The market I was in (just retired) has a very consistent pattern of sharply adjusting in the Spring and then leveling off as you get into late Summer-early Fall. Year over year the market is going up, but you have seasonal fluctuations. So in the Spring you would be making some pretty large adjustments to sales from the previous 4th quarter.
The other thing I would note is I have never, and I mean never, in over 35 years of appraising been stiped on my market analysis on page 1. It's always the comps. Sometimes I wonder if they even read that part.

 

[TerryRohrer]

The other thing I would note is I have never, and I mean never, in over 35 years of appraising been stiped on my market analysis on page 1.

The only one I can recall was when the market here was clearly going up, and had been for some time, and was as strong as we had ever seen it. The AMC idiot insisted that because the median price in the last period of the AMC was below that of the first, I had to make a negative market conditions adjustment.