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$/SF or % of sale price adjustments

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liznindy

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
I have a question with respect to adjustments applied for differences in GLA or GBA.

I apply adjustments (across the board) for differences in SF using a $/SF with the $ amount varying depending upon the quality and/ or cost of construction, price level, a portion of sale price per SF, etc. ($ amount applied is consistent within an appraisal report....varies from report to report depending upon property appraised).

I am reviewing an appraisal in where the adjustments applied to differences in GBA (multi-family housing) is a flat percentage of the sale price of the comparable (in this case, 10%).

This is atypical, in my experience, of appraisal practice.....but, thought I would ask if any of you do size adjustments in this way.

In this instance, the adjustments are not consistently applied as No. 1 is 1204 SF with a $4100 adjustment applied, and No. 2 is 1248 SF with a $2780 adjustment applied. ($2.4 to $3.4 per sf) BUT the adjustments are based on 10% of the comparables sale price. :?: :!:
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
I can't think of a case, in reality, where the application of a percentage adjustment, across the board, as a function of each sale, lends any consistency in the applied adjustment.

Percentages are percentages. Be careful with these.
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
Liz”
There is a very long thread below on this subject titled ‘square foot adjustments.’
I don’t make adjustments for size as you just described but if I wanted to do it by using $/sf, I would use the slope of the trend line of GLA graphed vs. adjusted $/sf after adjusting for every thing else but size. The slope of this line if used properly will result in the least sum of the squares estimate or lowest average deviation when you adjust to the subject.
Sounds to me like the appraiser under review is quite an artists.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
I do some commercial (used to do a lot - decided it wasn't cost effective for my time) and I've never seen that. When you use a percentage of the total sale price, you're including land, porches, parking, etc. Square foot size adjustments is just that - for the difference in size of the building. That can be obtained by adjusting for everthing else, then comparing the sales vs. their sizes. That should give you a reasonable adjustment for square footage differences.

I've never heard of this being an acceptable appraisal practice.

Roger
 

liznindy

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
Roger,

Thanks for your input...makes total sense when you put it that way.
 

Travis McGee

Senior Member
Joined
Sep 18, 2004
You did say this was a multi-family appraisal, correct ? I rarely make square footage adjustments for multi-family properties because bedroom and bath count per unit are what drive a multi-family properties ability to generate rent, so I adjust for those instead. I was wondering if anyone else does it this as well.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
To quote Curly or was it Mo..."never hoird of such a thing!".
 

Travis McGee

Senior Member
Joined
Sep 18, 2004
I don't think I explained myself very well in my last post and I would like to get some feeback, so here goes...

In doing a multi-unit appraisal, say your subject is a three unit property, with three, one bedroom, 1000 sq ft units, or 3000 GBA. Comp 1 has three two bedroom units of 900 sq ft each or 2700 GBA. I typically would make a downward adjustment to the comp for the superior bedroom count. An a upward adjustment to the comp for GBA just isn't market supported as a two bedroom unit would be deemed superior even if slightly smaller in GBA. It would also generate more rent . Obviously I would like to have similar bedroom counts on the comp units , but that is often not reality. So I would eliminate a GBA adjustment and explain why in my addenda.
 
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