Sensitivity Analysis To Drive Square Footage Adjustment

[Valueseeker]

@Michigan CG - Thank you for these useful responses. Very grateful. Thank you. This is most indeed most helpful.

George that last paragraph suggest a perspective I haven't really thought about. that mindset you just provided is helpful. Thank you.

 

[Meandering]

So I'm looking at what you posted and, here are my thoughts.



Comps 3 and 4 should be paired sales, being only 6 sf different in GLA, that you could extract the garage adjustment.
But you can not, because whatever adjustments you made prior, negated the economic difference for one garage stall. And I would question Comp 4 not having a driveway. Here, side of the street parking is far inferior to a driveway. So my thought here is that Comp 3 should not have had a negative adjustment, or Comp 4 has not had enough negative adjustments.

So the paring of Comps 3 & 4 tell me your previous adjustments are not correct.

So if we remove your previous adjustments from Comps 3 and 4, we get a direct 1 garage is worth $3,500 when compared to side of the street parking.
Nope.

So you need to really look at Comp4 sale price being high for not having a garage, or Comp 3 sale price being very low when it has a garage. There is something else missing, location, quality, age, condition, financing concessions. I don't know but there is something just not right in your previous work, either the research or the analysis.

Comps 2 and 5 should be paired sales having all things similar, except for GLA but the difference is only102 SF so the adjusted prices should be closer at this point.

Either your positive adjustment to Comp 2 is too small, or your negative adjustment to Comp 5 is too small.

You're comps don't bracket the bathroom, which, there is more utility in a second toilet than in a second shower, so either find one with a 1 bathroom or one with a 2.1 bathroom so you can compare it to the 1.1 baths to get the adjustment for the extra toilet.

Also, you did not bracket the garage. Check that Comp 4 really doesn't have a garage or a driveway.

Fix the first adjustments, or question the financing, quality, condition, location of the comps for something you have missed.

Good luck.

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[Mike Garrett RAA]

Developing a percentage of contribution solves many of the problems encountered by different price ranges of homes. While $2,500 for a deck might be right in, say, a $150,000 residence...it wouldn't be appropriate for an adjustment in a $300,000 property. Same is true for GLA adjustments.

I won't make an adjustment of less than $500 in lower priced properties and usually $1,000 to $5,000 in higher priced residences. All of my adjustments are also rounded to the nearest hundred dollar increment. Same holds true to value opinions. It's not rocket science...it's an art form supported by market data.

New home sales contract prices always drive me nuts. Nice basic home and the contract price is $278,415.85. Give me a break and round the darn thing off to $278,400. My opinion of value would most likely be $278,000. or $278,500 if the market data supported it.

 

[Noreen]

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?

I'm with Marion, almost sounds like your adjustments for one of the other features is high/heavy. When I'm buying a home, GLA/living space is one of the most important things to me. Good Luck!!

 

[Noreen]

So I'm looking at this and Comp #2, which creates a $40,000 spread looks like it should be in last position. ( is this a neighborhood sale?). Is this a town that has parking bans because that will impact Comp #4 dearly. I'm looking at those previous gross adjustments and something is out of wack. Where you too agressive in one area? I'd be tempted to take that adjusted factor across the board out then all things being equal I would let the market tell me what the adjusted market response would be. Good Luck!!