Sales Grid Adjustment Comments

[Mike Kennedy]

"The appraiser made adjustments for physical characteristics that include, bathroom count, central air and garage variances. All adjustments were made using marketplace extractions based upon their contributory value and market reaction".

Derivation Method?

 

[Meandering]

Derivation Method?

Extraction.

 

[JTip]

AMC/lenders like fancy words like 'quantitative analysis'. Be sure to recognize it and conclude that there is not enough data to support it. Same with matched paired sales, which are very nice when they exist, but rarely do.

 

[Mr Rex]

The "boiler plate" at the top of the Summary of Sales Comparison Approach which is followed by a line by line item explanation of the individual adjustments:

Adjustments made to the comparables are based on analysis of historic sales data of thousands of properties over an extensive time period. Through the use of paired sales when available within a particular sub market, the use of sensitivity analysis when appropriate, interviews with RE agents, potential buyers and sellers, RE investors and other market participants the appraiser has developed adjustments within local market sub markets (size, lot size, price range etc) that are reflective of typical market participants reaction to the various differences in amenities, condition, quality etc. Adjustments are not necessarily "derived or developed" for each individual appraisal report in a vacuum, but are derived and developed over a long period of time of analyzing similar properties in a particular market sub segment repetitively.

 

[Randolph Kinney]

AMC/lenders like fancy words like 'quantitative analysis'. Be sure to recognize it and conclude that there is not enough data to support it. Same with matched paired sales, which are very nice when they exist, but rarely do.

Quantum Mechanics has been replaced with Quantum Filed Theory. QM gives simultaneous multiple solutions until reality is examined and the one solution is observed.

 

[residentialguy]

Since you are most likely doing a UAD report, you need to clarify a few issues with UAD. I suggest starting out with something like this:


IDENTICAL UAD RATINGS OR DESCRIPTIONS MAY REQUIRE ADJUSTMENT - A comp with the same Rating or Description does not mean they are identical and don't require adjustment. It means the overall quality, condition, location, view, etc. of that property falls within the definition of the rating range, but still may need to be adjusted accordingly to reflect the market reaction to the variances on a property-specific basis. Fannie Mae's UAD FAQs #27 acknowledges that even though a comparable sale may have the same rating as the subject, it still might be superior or inferior to the subject - therefore an adjustment must be made, if warranted. It states: "These differences must be adjusted for in the sales comparison approach grid and an explanation must be provided in the sales comparison approach comment field or in an addendum."

UAD RATINGS MAY DIFFER FROM OTHER APPRAISERS - Every description and rating on this report comes from a very thorough investigation and verification of the subject and comparable sales, thus considered reliable. This is typically well beyond the diligence of most other appraisers and often results in ratings and descriptions that are more accurate. The higher appraiser's standards of this report, along with the ambiguity of the rating definitions and appraisers deciding to rate them all one rating since the CU tool has come out, may result in variances from the ratings and descriptions of this report to that of other appraisers. It's impossible for the appraiser to explain the rational of others and comment on appraisals that have not been reviewed. Reviewing other appraiser's appraisal results is NOT part of the assignment's Scope of Work and is considered a new assignment. If the lender/client wants clarifications other appraiser's appraisal results, including those submitted by FNMA's CU Tool, they will need to submit a request for an appraisal review assignment.

Clarification for "0" adjustments:

• Any description that is different from the subject and shows a zero (0) adjustment either means that: the variance was considered but found not to have significant contributory value in the market place or the market lacked sufficient data to support a quantified adjustment, therefore the variances were reconciled through qualitative analysis.

Clarification for blank adjustments:

• Any adjustment left blank means that the features of the comparable description are stated the same way as the subject in a general sense, however that does not mean that they are identical. For example, no two water views are identical, but both subject and comparable may state "B;Water". Therefore, an adjustment may still apply, if an adjustment can be supported by market data. If left blank, any variances that exist were either:

1. considered but found not to have significant contributory value in the market place or
2. reconciled through qualitative analysis due to lack of sufficient market data to support a quantified adjustment.

 

[ucbruin]

The "boiler plate" at the top of the Summary of Sales Comparison Approach which is followed by a line by line item explanation of the individual adjustments:

Adjustments made to the comparables are based on analysis of historic sales data of thousands of properties over an extensive time period. Through the use of paired sales when available within a particular sub market, the use of sensitivity analysis when appropriate, interviews with RE agents, potential buyers and sellers, RE investors and other market participants the appraiser has developed adjustments within local market sub markets (size, lot size, price range etc) that are reflective of typical market participants reaction to the various differences in amenities, condition, quality etc. Adjustments are not necessarily "derived or developed" for each individual appraisal report in a vacuum, but are derived and developed over a long period of time of analyzing similar properties in a particular market sub segment repetitively.

I don't care that you posted this, so please don't take it personally....
I would have the same reaction regardless of who posted...
I love the boilerplate aspect of the comment....
I just wouldn't make it soooo wordy....
Just my opinion....
BS explanations should be kept to a minimum of words....

This thread could become an "instant classic" for Strolling Down Appraisers Forum Memory Lane"...

My sincere apologies if the provided example was meant to be facetious!!!!

 

[residentialguy]

I like what Rex posted. UC likes to stir the pot, so please ignore that comment above. Regarding the adjustments, you need to explain your analysis....just make sure you've done what was stated. Obviously you need to tweak it so that it is representative to the work and analysis that you performed.

 

[residentialguy]

Along the lines of what Rex posted, I like to educate the reader about adjustments with this:

DISCLOSURE AND DISCUSSION OF PAIRED DATA ANALYSIS AND ADJUSTMENTS: Paired analysis is a tool often used to support adjustments in the Sales Comparison Approach. This is often evident between the comparables within the sales comparison. However, not all adjustments can be directly extracted or supported by the available market data with a high degree of accuracy with paired data analysis alone. Some adjustments have an element of subjectivity and professional judgment which the appraiser has applied based on prior observations of the reactions of typical/knowledgeable buyers and sellers in the marketplace. Interviews with local market and local Real Estate professionals upon verification of all the sales were conducted for additional support for establishing the contributing value of all variances noted. These adjustments are then refined using sensitivity analysis within the grid and tested for reasonableness with the selected comparables. This method is a standard and well accepted practice within the appraisal industry. All interested parties are encouraged to have an understanding of basic valuation practices when appraising atypical or complex properties; or where there is an extreme absence of like elements of comparison; or in instances where the market data is inconsistent with which to draw better supported adjustments and overall value conclusions. Individual adjustments cannot be relied on independently.

Appraising Residential Properties, 4th Edition, Appraisal Institute, Page 342, "Limitations of Paired Data Analysis" states: "...This brief discussion of paired data analysis may seem to suggest that identifying the effects of property differences from market data is a straightforward procedure that can produce accurate, complete mathematical results in all appraisals. Such an impression would be misleading. Appraisers develop an opinion of market value by applying their judgment to the analysis and interpretation of data. Paired data analysis is a tool that an appraiser can apply to market data in some circumstances. When used in conjunction with other analytical tools, this type of analysis supports and guides the appraiser's judgment, but it does not take its place. Perfect sets of comparables that vary in a single, identifiable respect are rarely found. Because properties that are sufficiently similar to the subject are usually limited in number, the decision to apply paired data analysis in a given situation is a matter of judgment. Often the sampling size may not be larger enough to provide a solid statistical foundation for the appraiser's conclusions. Nevertheless, paired data procedures are important valuation tools that appraisers should use whenever possible. Identifying matched data sets and isolating the effects of variables is a practical methodology for studying market data, even if a comprehensive paired data analysis cannot be performed. When only a narrow sampling of market data is available, which would not lend itself to statistical analysis, paired data analysis can be used to test the results of other analytical procedures..."

Regression analysis was not used for single line adjustments due to the lack of refinement ability of regression analysis with the limited data available and using regression analysis would likely produce misleading results.

 

[Proactive]

McKissock offers a great CE course that I found to be helpful: Residential Report Writing: More Than Forms