Reconciling Comps Adjusted Values To Determine Final Subject Value

[Mike Kennedy]

"Comp #1's adjusted sales price was $242,580, Comp #2 $230,610 and Comp #3 $231,140. The final value given to the subject was $242,580. "

Dear Appraiser, kindly provide a detailed explanation of exactly what the $580., $610., and $140. factors in the comparables' adjusted values represent and specific info on the $580. Subject's item/items. Thanks in advance. Your Friendly "Neighborhood" Reviewer.

* typo corrected-M

 

[hastalavista]

"Comp #1's adjusted sales price was $242,580, Comp #2 $230,610 and Comp #3 $231,140. The final value given to the subject was $242,580. "

Dear Appraiser, kindly provide a detailed explanation of exactly what the $580., $610., and $140. factors in the comparables' adjusted values represent and specific info on the $580. item/items. Thanks in advance. Your Friendly "Neighborhood" Reviewer.

Just as an alternative perspective and speaking as a reviewer....

I agree that the point-value of $242,580 is more precise than I would normally expect.
But if the appraisal provided its rationale (as you have asked for) as to why the high-adjusted sale represented the best indicator of value for the analysis, I wouldn't care if they came it at $242,580, or $242,500, or $240,000. Their point-value conclusion is their decision to make. All I need as a reviewer is enough information to conclude whether their point value is adequately supported or not*.

*Unless I was tasked with concluding my own opinion of value. Then I get to select my specific point-value.

 

[Tom4value]

USPAP says we come up with a value that is best supported. No, it is not exact wording,I am paraphrasing. As a general rule, if I am using one comp as the most reliable, like to have at least one other comp support that value. If one comps is a “twin”, I will break that guideline and explain why.

Though there is no rule against it, I round my value to the nearest $1,000. To me, and others my disagree, saying the value is $345,729 (adjusted value of 1 comp) seems like you put minimal thought into the reconciliation.

 

[Terrel L. Shields]

round my value to the nearest $1,000. To

You reflect the comparative uncertainty with the calculation. If you made a $1,000 adjustment then your precision is to the 000.


Precision bias is a form of cognitive bias in which an evaluator of information commits a logical fallacy as the result of confusing accuracy and precision. More particularly, in assessing the merits of an argument, a measurement, or a report, an observer or assessor falls prey to precision bias when he or she believes that greater precision implies greater accuracy (i.e., that simply because a statement is precise, it is also true); the observer or assessor are said to provide false precision.

Precision bias, whether called by that phrase or another, is addressed in fields such as economics, in which there is a significant danger that a seemingly impressive quantity of statistics may be collected even though these statistics may be of little value for demonstrating any particular truth.

It is also called the numeracy bias, or the range estimate aversion.

 

[Mike Kennedy]

"Comp #1's adjusted sales price was $242,580, Comp #2 $230,610 and Comp #3 $231,140. The final value given to the subject was $242,580. "

Dear Appraiser, kindly provide a detailed explanation of exactly what the $580., $610., and $140. factors in the comparables' adjusted values represent and specific info on the $580. item/items. Thanks in advance. Your Friendly "Neighborhood" Reviewer.

Just as an alternative perspective and speaking as a reviewer....

I agree that the point-value of $242,580 is more precise than I would normally expect.
But if the appraisal provided its rationale (as you have asked for) as to why the high-adjusted sale represented the best indicator of value for the analysis, I wouldn't care if they came it at $242,580, or $242,500, or $240,000. Their point-value conclusion is their decision to make. All I need as a reviewer is enough information to conclude whether their point value is adequately supported or not*.

*Unless I was tasked with concluding my own opinion of value. Then I get to select my specific point-value.

I agree with your sentence #1 above; the appraiser's comments to the Reviewer do not explain or support the non-rounded adjusted values.

I agree that "their point-value conclusion is their decision to make" - with additional commentary explaining how he/she/they arrived at the final value.

 

[Michigan CG]

Some appraisers do not round the GLA adjustments while other appraisers round to the nearest $500.

I adjust in increments of $1,000; supporting anything less is not possible in my opinion given the data we are given is not perfect.

 

[J Grant]

I work in a bank reviewing appraisals. I recently received an appraisal that looked odd to me. Comp #1's adjusted sales price was $242,580, Comp #2 $230,610 and Comp #3 $231,140. The final value given to the subject was $242,580. I asked the appraiser how she came to that conclusion, and the response she put in the report was "A USPAP CHANGE, WE ARE NO LONGER USING A WEIGHTED AVERAGE OF THE COMPS, WE NOW CHOOSE A COMP BASED ON FACTORS THAT MAKE IT THE MOST CONSISTANT WITH THE SUBJECT, SUCH AS SQUARE FOOT, LOCATION, LOT SIZE, CONDITION, AMENITIES, NEIGHBORHOOD, NET AND/OR GROSS ADJUSTMENT, AS I HAVE DONE AND STATED WHY I CHOSE COMP ONE TO SUPPORT THE VALUE CONCLUSION." When I called and spoke with her, she told me USPAP does not permit averaging (I agree), it does not mention weighted averaging (I agree), and this was the method used way back when that her office has recently decided to go back to.

I am very curious to hear other appraisers opinion on this.

She sounds like a poorly trained appraiser racing through volume. It sounds like she literally imported a computer derived value downloaded from WinTotal /Alamode software.

Peer practice is a USPAP standard and virtually no competent appraiser peers reconcile at a number of $242,580- because we are not ringing up items at a cash register.! The peer practice is to round off to a whole number., such as $242,000 or $243,000...though there can be cases of $242,500. ....rounded to whole numbers is how most sale contracts are written...unless they are new construction contracts where the contract price is the result of adding on line items at cost to a base price.

 

[TRESinc]

"Comp #1's adjusted sales price was $242,580, Comp #2 $230,610 and Comp #3 $231,140. The final value given to the subject was $242,580. "

Dear Appraiser, kindly provide a detailed explanation of exactly what the $580., $610., and $140. factors in the comparables' adjusted values represent and specific info on the $580. Subject's item/items. Thanks in advance. Your Friendly "Neighborhood" Reviewer.

* typo corrected-M

how about sale price? comp 1 could have sold for $250,580 and been adjusted down to $242,580. you need to view the data before making any assumptions about adjustments.

 

[Non Sequitur]

You reflect the comparative uncertainty with the calculation. If you made a $1,000 adjustment then your precision is to the 000.


Precision bias is a form of cognitive bias in which an evaluator of information commits a logical fallacy as the result of confusing accuracy and precision. More particularly, in assessing the merits of an argument, a measurement, or a report, an observer or assessor falls prey to precision bias when he or she believes that greater precision implies greater accuracy (i.e., that simply because a statement is precise, it is also true); the observer or assessor are said to provide false precision.

Precision bias, whether called by that phrase or another, is addressed in fields such as economics, in which there is a significant danger that a seemingly impressive quantity of statistics may be collected even though these statistics may be of little value for demonstrating any particular truth.

It is also called the numeracy bias, or the range estimate aversion.

I agree, adjustment grids in residential forms imply accuracy that just isn't there.

 

[BRCJR]

As a reviewer I think, "what are they thinking" when I see a Final Reconciliation like 750,490.

As a reviewer I think, "are they thinking"?