Sensitivity Analysis To Drive Square Footage Adjustment

[Valueseeker]

Hey folks,

I've been utilizing the excel sheet that's been circulating around here. My question is say the sensitivity analysis shows the sqft adjustment to be 2.00 per square foot, would you bother making the adjustment?

It's a shortsale for a little over 105k

I want to broaden this question and see what you would do if the sensitivity analysis suggests an adjustment of something similar (really low) on a 250k+home. Do you still use it?

"Really low" is a relative term. I'm just referring to what I see around here it seems most appraisers are adjusting 20-40.00 per sqft on that price range.

Thanks to all you answering my questions. It's been truly a great learning experience conversing with you all.

 

[Meandering]

What's the range of adjusted values, before GLA adjustment?

What's the range of GLAs?

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[Valueseeker]

The range I believe were 1250-2000gla. Adjusted values were pretty tight around 103k to 110k. If specifics help, I could post it tomorrow. I have abandoned my post for the evening.

 

[Tim The Enchanter]

$2/SF sounds low for a site size adjustment. But that's here.

 

[Meandering]

The range I believe were 1250-2000gla. Adjusted values were pretty tight around 103k to 110k. If specifics help, I could post it tomorrow. I have abandoned my post for the evening.

750 sf spread $7k spread?

Sounds like you're missing something on the bigger ones or over compensated for the smallest ones. Without knowing more, I'm going to suspect if none have a premium lot in size, location or view, there is a very suspect condition or quality rating lurking in your analysis.

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[Valueseeker]

there are condition adjustments and location adjustments. I leave the sqft adjustment to do last. Reading your question again- I'm not entirely sure what the adjusted price ranges were before sqft. I guess I was wondering what goes through your mind when sensitivity analysis spits out a low value to adjust with?

 

[Terrel L. Shields]

I want to broaden this question and see what you would do if the sensitivity analysis suggests an adjustment of something similar (really low) on a 250k+home. Do you still use it?

No. but when differences in size/price are low, then think of the adjustments as a curve, if that curve is too flat (shallow) you can end up with a wrong answer. Try substitution of another sale in the Sens An with greater difference in SF and see if it works better.

 

[Meandering]

there are condition adjustments and location adjustments. I leave the sqft adjustment to do last. Reading your question again- I'm not entirely sure what the adjusted price ranges were before sqft. I guess I was wondering what goes through your mind when sensitivity analysis spits out a low value to adjust with?

Like all appraisal questions,

It just depends.

But the spreads you state suggest $9.30 per square levels the playing field in the middle, so for you to get $2.00 a square, tells me your adjustments are jacking up the value of the smaller comps needlessly, or your undervaluing the largest comps, Of course unless, there are a proliferation of REOs in the market that are depressing values. So it just depends.

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[Meandering]

The 1250 sf comp condition adjustment is too large.

 

[Tim The Enchanter]

The answer is....

The Great Carnac the Magnificent.