Paired Sales - Supporting Adjustments

[Mr Rex]

Under the same reporting standard, would you report yourself as hot, doable, or non committal while you SOW statement makes a circular turn that went no where and did nothing. Perhaps it fires old synapses from a long ago demo?

 

[Elliott]

Are buyers and sellers aware of this 'paired sales' behavior that you speak of ?
I asked a few realtors if they had heard of 'paired sales' and they just looked at me
and shook their head.

 

[Joyce Potts]

Under the same reporting standard, would you report yourself as hot, doable, or non committal while you SOW statement makes a circular turn that went no where and did nothing. Perhaps it fires old synapses from a long ago demo?

Wow. Perhaps thou dost protest too much?

And no -- I did my demo back in 1990 or 1991. What year did you do yours?

 

[Joyce Potts]

Are buyers and sellers aware of this 'paired sales' behavior that you speak of ?

Are you suggestisng buyers and sellers sit down with a calculator and derive their offers and acceptances based on a fireplace = $2,000? Exact paired sales is nothing more than a quantative attempt to quantify the value of certain 'elements' to a property or what drives buyers and sellers to pay for a given component on any given day, given all the other market forces at the time, or in some cases, farces.

Submit an appraisal without explanation of how your adjustments were derived, and you may wish you had added some language that helped, at the very least, educate the readers. Better yet, remember this thread if a state investigator asks you for your workfile and where the support for each and every adjustment came from. With that language, you're essentially covered UNLESS you got lazy and your data afforded paired sales and didn't take the time or make the effort.

 

[prasercat]

Anyone else find that the regression models themselves provide ample support for the above?

As for what a state board will say - that could be a function of who is on the state board. After reading this forum on the subject of adjustments over the years it seems that there are those that claim the ability to tie these numbers down to narrow dollar precision and provide undeniable levels of numerical support (which presumably would be supported by some level of statistics as is the case for most numerical pursuits that make such claims) and would probably expect the same of others.

http://appraisalnewsonline.typepad....-the-market-qualitative-vs-quantitative-.html

I think that limiting the discussion of adjustments to paired sales and regression analysis is a response to outside pressures that expect such without an appreciation of the complexity and inefficiency of real estate markets and the complexity of human behaviour. We must put on an act to satisfy others but face the full liability when we don't measure up to their expectations. Should we hold scientists accountable for the fact that science is no longer considered "exact" but relative or contextual? That's just to messy a reality to promote and for many to accept, especially when money is on the line.

There is no computer model that can predict or understand complex systems well, especially when one extrapolates out in time to any significant degree; like predicting the weather, or how a swarm of bumble bees will interact and move through the air. Similarly, the real estate market and the prediction of human behaviour is also impossible to predict "exactly".

In reality, appraisers must rely on any and all indications of value they can find for a particular appraisal, not just paired sales and regression, due to their limitations. If one stall garages in the subject area on separate deed are selling in the market for 15-22k, an adjustment of 5k for a garage stall is nonsense, even if determined by regression or paired sales. If a typical buyer can build a typically sized deck in the subject neighborhood for 5k, a new deck that is a typical size for the neighborhood sure as heck ain't work 1k or 10k, I don't care what other way you found the other information.

When you can seize paired sales, by all means do so; however, they do not define appraisal science in themselves. The fact is, there is no exact measurement, whether in science or math, most all things are relative and have an associated error or limitation of context. The error or limitation of the measurement is actually just as important as the measurement itself, yet we don't discuss this - it is hush, hush. However, it should be pointed out that the associated error and limitation of context is not in itself an exact science either.

Money interests want and need "exact", but reality is otherwise. They are the impetus behind the "form report" and now the "UAD". These are all attempts to reduce a complex and inexact world into a simple and exact one; however, the end result of these measures is only more "inexactness" in the report and being more in denial of the analytical requirements of a complex world.

 

[PropertyEconomics]

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?

Rosco ... I would be interested to know if your new analysis is providing anything different than your prior. I realize the dollar amounts may be different but Im curious if the amounts as percentages are different.

Thanks.

 

[Joyce Potts]

I think that limiting the discussion of adjustments to paired sales and regression analysis is a response to outside pressures that expect such without an appreciation of the complexity and inefficiency of real estate markets and the complexity of human behaviour. We must put on an act to satisfy others but face the full liability when we don't measure up to their expectations. Should we hold scientists accountable for the fact that science is no longer considered "exact" but relative or contextual? That's just to messy a reality to promote and for many to accept, especially when money is on the line.

There is no computer model that can predict or understand complex systems well, especially when one extrapolates out in time to any significant degree; like predicting the weather, or how a swarm of bumble bees will interact and move through the air. Similarly, the real estate market and the prediction of human behaviour is also impossible to predict "exactly".

In reality, appraisers must rely on any and all indications of value they can find for a particular appraisal, not just paired sales and regression, due to their limitations. If one stall garages in the subject area on separate deed are selling in the market for 15-22k, an adjustment of 5k for a garage stall is nonsense, even if determined by regression or paired sales. If a typical buyer can build a typically sized deck in the subject neighborhood for 5k, a new deck that is a typical size for the neighborhood sure as heck ain't work 1k or 10k, I don't care what other way you found the other information.

When you can seize paired sales, by all means do so; however, they do not define appraisal science in themselves. The fact is, there is no exact measurement, whether in science or math, most all things are relative and have an associated error or limitation of context. The error or limitation of the measurement is actually just as important as the measurement itself, yet we don't discuss this - it is hush, hush. However, it should be pointed out that the associated error and limitation of context is not in itself an exact science either.

Money interests want and need "exact", but reality is otherwise. They are the impetus behind the "form report" and now the "UAD". These are all attempts to reduce a complex and inexact world into a simple and exact one; however, the end result of these measures is only more "inexactness" in the report and being more in denial of the analytical requirements of a complex world.

You're absolutely right. The problem is too many appraisers took license with the very method I posted above. Catagories such as 'condition', 'effective ages' -- were generally catagories a Reviewer could always go first to see find any suggestion of an inflated value.

The UAD is the very thing designed to cut back on those areas where there was generally a higher probability of 'puffed up adjustments'.

And of course with narratives we all know the same garbage games go on, they're just more difficult to spot <wink, wink>.

 

[Terrel L. Shields]

I think that limiting the discussion of adjustments to paired sales and regression analysis is a response to outside pressures that expect such without an appreciation of the complexity and inefficiency of real estate markets and the complexity of human behaviour.

precisely. Our work is a heuristic. It involves judgment. Fannie mae has declared appraiser judgment obsolete and useless. Fill in the formula. Win a prize. Welcome to the new paradigm...same as the old paradigm

 

[farmguy]

Roscoeman,

Hang in there.

It is refreshing to see an appraiser actually interested with what the market says.

 

[Roscoeman]

Rosco ... I would be interested to know if your new analysis is providing anything different than your prior. I realize the dollar amounts may be different but Im curious if the amounts as percentages are different.

Thanks.

PE, it was very revealing and very empowering... Within 0-5 for GLA and $1,000 for pool. Just found an adu (accesory dwelling unit) approx 500sf that adjusted at $40,000 (paired sale on same street, urban area and within a month of each other). I was surprised, however, after a discussion with a colleague and all the baby boomers living at their kids home it made sense.

Percentages are very close and would have been supported.

Thanks...