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Need Urgent Help With Time Adjustment

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North Carolina
SALES DATE RANGE # OF SALES MEDIAN SALES PRICE PERCENTAGE OF INCREASE/DECREASE FROM PREVIOUS DATA

2008 TO DATE 13 $1,175,000 -28.79%
2007 33 1,650,000 15.79%
2006 33 1,425,000 2.70%
2005 56 1,387,000 50.00%
2004 72 925,000 41.00%
2003 70 657000 20.00%
2002 70 545000




Im Doing And Appraisal Of A High End Home Located On An Island With Sound Views. Sales Are Very Limited On This Island As You Can See. There Are Only 13 That Have Sold This Year. There Are No Other Islands To Find Comps From. This Is A Very Unique Market. The Data Above Shows What Has Happened To The Property Values Since 2001.

I Had To Use Some Current Sales And Some Older Sales For Comparables. Im Having Trouble Determining What Kind Of Time Adjustment Is Needed. The Data Above Shows Values Have Decreased 29+/-% For The Year To Date Data As Compared To The Previous Years Data. When I Compare The Last 12 Months Sales To The Previous 12 Months Sales Is Shows A 34% Decline. When I Compare The Past Six Months Data To The Previous Six Months Data It Shows A 14% Decline.

I Have Used Four Sales And One Listing As Comparables. Aftere All Adjustments Are Made Except For Time They Adjust Out As Follows:

Sale 1 $2,000,000 Sold Date 04/2007
Sale 2 $1,850,000 Sold Date 09/2007
Sale 3 $1,900,000 Sold Date 06/2008
Sale 4 $1,700,000 Sold Date 02/2008
Listing $1,700,000 Listing Was Adjusted For Lp/sp Ratio

Can Someone Help Me With My Time Adjustment. How Would I Adjust Each Sale. Every Way I Do It It Throws Sale One And Sale Two Way Off.
 
Last edited:

Don Clark

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Virginia
SALES DATE RANGE # OF SALES MEDIAN SALES PRICE PERCENTAGE OF INCREASE/DECREASE FROM PREVIOUS DATA

2008 TO DATE 13 $1,175,000 -28.79%
2007 33 1,650,000 15.79%
2006 33 1,425,000 2.70%
2005 56 1,387,000 50.00%
2004 72 925,000 41.00%
2003 70 657000 20.00%
2002 70 545000






Im Doing And Appraisal Of A High End Home Located On An Island With Sound Views. Sales Are Very Limited On This Island As You Can See. There Are Only 13 That Have Sold This Year. There Are No Other Islands To Find Comps From. This Is A Very Unique Market. The Data Above Shows What Has Happened To The Property Values Since 2001.

I Had To Use Some Current Sales And Some Older Sales For Comparables. Im Having Trouble Determining What Kind Of Time Adjustment Is Needed. The Data Above Shows Values Have Decreased 29+/-% For The Year To Date Data As Compared To The Previous Years Data. When I Compare The Last 12 Months Sales To The Previous 12 Months Sales Is Shows A 34% Decline. When I Compare The Past Six Months Data To The Previous Six Months Data It Shows A 14% Decline.

I Have Used Four Sales And One Listing As Comparables. Aftere All Adjustments Are Made Except For Time They Adjust Out As Follows:

Sale 1 $2,000,000 Sold Date 04/2007
Sale 2 $1,850,000 Sold Date 09/2007
Sale 3 $1,900,000 Sold Date 06/2008
Sale 4 $1,700,000 Sold Date 02/2008
Listing $1,700,000 Listing Was Adjusted For Lp/sp Ratio

Can Someone Help Me With My Time Adjustment. How Would I Adjust Each Sale. Every Way I Do It It Throws Sale One And Sale Two Way Off.

You have a loss in value of about $30,000 per month.
 

PropertyEconomics

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Jun 19, 2007
Professional Status
Certified General Appraiser
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New Mexico
When placed on an annual compound rate of change, Sale 1 - 2 shows -18%, Sale 1 - 3 shows -4.31% and Sale 1 - 4 shows -18%, Sale 2 - 4 shows - 19.45%.

Two indicators, including the longest, show -18% compounded annually over the time periods represented with one being higher and one being lower.

Application of 18% compounded annually to your sales would show indicated time adjusted values of:

1 -- $1,541,000
2 -- $1,544,000
3 -- $1,843,000
4 -- $1,547,000

A pretty tight range with Sale 3 being skewed.

Adjustments for other differences would then be taken from there .... will be interesting to see what you come up with. I also might add you may want to expand your measurements over that the four sales you have used just to be sure your measurements are correct. Good luck
 

Zero

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Jun 7, 2006
Professional Status
Certified Residential Appraiser
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Virginia
You have a loss in value of about $30,000 per month.

This answer assumes a linear change, that there is a steady $30,000 per month decrease, which is not a very safe assumption. Change just doesn't typicall happen like this. While a lot of appraisers use this method, it is not a very accurate or mathematically sound way to analyze change.

To properly analyze change, you should make a percent change adjustment based on median (or average) sales price for your neighborhood and/or market area from the month of current time of appraisal compared to month of sale of comparable. This can then be reconciled by paired sales analysis on your grid. Your historical analysis does not necessarily have to match/dictate the exact adjustment, but it should support it.

Percent change equals new price minus old price divided by old price or
(N-O)/O. This will indicate either a negative or positive change.

A lot of times you won't have enough data for a single month to get an accurate picture, so you can combine 3 (or 2) months of data, which will help correct for large spikes due to insufficient data. Instead of just using April 2007 sales data, you combine Feb/Mar/Apr 2007 data to get a better picture. Do this for the last year or two and you will get a much better feel for the market. I also recommend using medians rather than means/averages.

Also, don't forget to look at the current market activity. If you see pendings and market tested listings are mostly below your most most current sales, you might need to adjust for this, too. Just remember, you are not basing your opinion of value on the listings/pendings, you are basing a time adjustment for recent sales on current market activity.
 

Joyce Potts

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Look to your most similar active listings, Luke.
 

WEAVER APPRAISALS

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Certified Residential Appraiser
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North Carolina
I Would Like To Thank All Of You For Your Help So Far. I Went Back In Time All The Way To 2005 And Tried To Find Some Resales. I Did Find Two. Both Sold In 2005 And Then Again In 2008. Both Showed A 10% Decline In Sales Prices From 2005 To 2008. When Adjusted Per Month It Showed A .35% Decline Per Month. Should I Use This Data For My Time Adjustment Since They Are True Paired Sales. No Renovations Were Done. By Using This It Would Be A Much Lower Time Adjustment.
 

WEAVER APPRAISALS

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Joyce, The Most Similar Active Listing Is Comparable FoUr Which Is Next Door To The Subject. It Is Listed For $2,150,000 And After Adjusted 17% For Lp/sp Ratio And Other Differences The Adjusted List Price Indicator Is $1,700,000+/-. This Is A Very Similar Home Located Right Next Door With The Same Views And Has Been On The Market For 200 Days. The Subject Was Listed For Sale For $2,200,000 In 10/2006 For 200 Days And Never Sold.
 
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The Sheriff

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Mar 21, 2007
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Certified Residential Appraiser
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Arizona
Andrew stated:

'To properly analyze change, you should make a percent change adjustment based on median (or average) sales price for your neighborhood and/or market area from the month of current time of appraisal compared to month of sale of comparable. This can then be reconciled by paired sales analysis on your grid. Your historical analysis does not necessarily have to match/dictate the exact adjustment, but it should support it.'

Flawed logic here... you stated the month of sale of the comparable... it should be the contractual date for that sale. What happens if it was a 90-day close from the date of contract - in some areas of Arizona, the market has shifted as much as 2.4% per month (did one yesterday where this was the case). Also, if you have new construction, those contracts could be six to seven months old prior to the close of escrow. Guidelines also state to utilize the contractual date, not the sales date.
 

JRS at OBX

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Jun 13, 2006
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North Carolina
Which Island is it?
 

PropertyEconomics

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Jun 19, 2007
Professional Status
Certified General Appraiser
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New Mexico
Joyce, The Most Similar Active Listing Is Comparable FoUr Which Is Next Door To The Subject. It Is Listed For $2,150,000 And After Adjusted 17% For Lp/sp Ratio And Other Differences The Adjusted List Price Indicator Is $1,700,000+/-. This Is A Very Similar Home Located Right Next Door With The Same Views And Has Been On The Market For 200 Days. The Subject Was Listed For Sale For $2,200,000 In 10/2006 For 200 Days And Never Sold.


And still hasnt sold I might add.

I guess no one likes measurement on a annual compound basis using the actual sales utilized within the report as they have been determined by the appraiser to be comparable .... :rof:
 
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