Paired Sales - Supporting Adjustments

[Roscoeman]

For the last few months a colleague and I have been obsessed about finding paired sales for supporting our adjustments. Have had a file of them for years, however, they were getting old and so we decided to start over again.

We took it somewhat farther and created a chart to place in our addendum for the larger adjustments, providing support.

So far two of our clients have called us and asked if they could keep our paired sales on file to reference for other appraisals.

Not sure how this will work in the end, however, if the other appraisals don't provide support they might be called on the carpet.

We shall see...

Is anyone else doing this in their reports?

 

[Lee Lansford]

...

So far two of our clients have called us and asked if they could keep our paired sales on file to reference for other appraisals.

...

Aaaaahhh!

"The List" for adjustments lives!

 

[Tom Woolford]

I would discourage them from doing that. A pool may be worth 25k in one market and only 5k in another. They would not be doing themselves any favors by treating an adjustment as gospel for any report. Since you are preparing a summary report, I would discourage you from continuing the practice. That is data that most probably should be attached to the file, not the report.

 

[Lee Lansford]

...

...finding paired sales for supporting our adjustments.

...

After nearly 28 years as an appraiser, I'm still looking.

A bit more seriously, actual paired sales (2 sales of properties having but a single discernible difference) are quite rare in practice.

 

[Roscoeman]

I would discourage them from doing that. A pool may be worth 25k in one market and only 5k in another. They would not be doing themselves any favors by treating an adjustment as gospel for any report. Since you are preparing a summary report, I would discourage you from continuing the practice. That is data that most probably should be attached to the file, not the report.

We only use it in the report when the adjustments are typically out of the ordinary or large.

I understand that they are different in each market, and I have only used them in the market of the subject.

Lenders have been asking recently for support for adjustments and so far there have been five that have requested them. They would not take a survey or estimate, they wanted proof (paired sales). So we gave it to them.

 

[Roscoeman]

After nearly 28 years as an appraiser, I'm still looking.

A bit more seriously, actual paired sales (2 sales of properties having but a single discernible difference) are quite rare in practice.

You are so correct, however, after you have found say an adjustment for GLA and you are searching for a pool adjustment in the same market and the only difference is a pool and GLA, then you can apply the GLA and there is your pool adjustment.

 

[Lee Lansford]

...

Lenders have been asking recently for support for adjustments and so far there have been five that have requested them. They would not take a survey or estimate, they wanted proof (paired sales). So we gave it to them.

You're able to find paired sales: sales of properties having but a single significant difference?

Some, not all, but "some", of my work is in typical suburban subdivisions and I can't recall the last time I came across two such sales.

OK...there are times when the subject is a townhome and there are sales of the same model or sales of apartment-design condo units having significant similarities, but, otherwise, not.

 

[prasercat]

You are so correct, however, after you have found say an adjustment for GLA and you are searching for a pool adjustment in the same market and the only difference is a pool and GLA, then you can apply the GLA and there is your pool adjustment.

Yes, you are correct, but be sure you are adjusting for all the significant market factors for a particular area:

Naturally, you are only eliminating the GLA. Are the pools the same type of construction?, the same size?, the same shape?. Is the topography the same?, is the view the same?, is the quality of the improvements the same?, is the effective age the same?, is the size of the lot the same?, is the appeal of the location the same?, is there any obsolescence with the design appeal?, is the neighborhood the same?, is the average demographic the same if two neighborhoods are being compared? (older demographics, due to physical limitations, generally leave pools idle; however, hot tubs are more attractive to this older demographic), Is the climate the same? (where I live, just several miles can completely change one's climate from a short cool summer mountain climate to a much longer hot summer climate at a much lower altitude), etc?

 

[Roscoeman]

Yes, you are correct, but be sure you are adjusting for all the significant market factors for a particular area:

Naturally, you are only eliminating the GLA. Are the pools the same type of construction?, the same size?, the same shape?. Is the topography the same?, is the view the same?, is the quality of the improvements the same?, is the effective age the same?, is the size of the lot the same?, is the appeal of the location the same?, is there any obsolescence with the design appeal?, is the neighborhood the same?, is the average demographic the same if two neighborhoods are being compared? (older demographics, due to physical limitations, generally leave pools idle; however, hot tubs are more attractive to this older demographic), Is the climate the same? (where I live, just several miles can completely change one's climate from a short cool summer mountain climate to a much longer hot summer climate at a much lower altitude), etc?

Of course all this is verified, otherwise it wouldn't be considered a paired sale...:Eyecrazy:

 

[prasercat]

Of course all this is verified, otherwise it wouldn't be considered a paired sale...:Eyecrazy:

I have hot dreams of neighborhoods that have such similar properties as you mention. I rarely have worked in them, but it's always a really nice change of pace, even like a vacation from appraising. I can remember doing a few where almost all the comps were the same model, built at nearly the same time, in nearly the same condition, the same quality, the same lot size, the.... Now that is where the big money in appraising is!.... and lots of "paired sales"! If only I could click my heels....