Sqaure Feet vs Comps and adjustment calculation logic

[visionlinx12]

Are you sure that the main sq. ft.(above grade living area) shown for the comps includes the basement area? Was there a comment in the report indicating the living area for the comps included the finished basement area?

The majority of the comps were "walk out" basements, meaning the front of the house has the basement below grade, but the back of the house is above grade. But Comp #4 (will post report later today) has the basement completely below grade. I have been in this house. I know that Comp #4 which is listed as 4,600 SF does include the basement in that figure. I knew the past owners that sold it. He was telling me that his Real Estate agent told him they would list it as 4,600 SF since it was all finished by the builder originally.

 

[visionlinx12]

The double adjustment seems fine.
The first is adjusting for size. The 2nd is adjusting for the difference in level of finish (as in yours has none in the basement).

I did not realize this type of "double adjustment" is normal. Just gives me greater sense of security to invest in my house and finish the basement then. Looks like if I did have that done, then I would have a decent amount (in $ terms) of the adjustments disappear.

 

[visionlinx12]

Thank you everyone for the insight. I am having trouble uploading the scanned 2 page report. Will try tonight at home.

 

[Ms. Janet]

The double adjustment seems fine.
The first is adjusting for size. The 2nd is adjusting for the difference in level of finish (as in yours has none in the basement).
.

That makes no sense to me. When the property is adjusted for size/living area square footage differences, the area is finished area.Why would you adjust a second time for the same area? The subject and the comps either have a basement or they do not have a basement and the basement is either finished or unfinished.

 

[Pam Wyant]

That makes no sense to me. When the property is adjusted for size/living area square footage differences, the area is finished area.Why would you adjust a second time for the same area? The subject and the comps either have a basement or they do not have a basement and the basement is either finished or unfinished.

From what I have seen reviewing reports and talking with others, different appraisers adjust different ways. Some adjust everything (except baths) in basement line one for square feet/square feet of finish. Some adjust for just the basement versus none or partial in line one, and for the finish in line two. And, I've seen a few split it. As long as the adjustments are consistent and supported, personally I don't see that it makes any difference which way we do it.

 

[NachoPerito]

That makes no sense to me. When the property is adjusted for size/living area square footage differences, the area is finished area.Why would you adjust a second time for the same area? The subject and the comps either have a basement or they do not have a basement and the basement is either finished or unfinished.

I do it all the time on the commercial side. The concept is the same.

Say you have a 20k square foot warehouse with 5k SF office.

A comp had 22k square feet with no office.

First I adjust for difference in having a smaller gross area.

Second I could adjust $40/SF for office finish. 22,000 x .25 x $40

 

[visionlinx12]

I do it all the time on the commercial side. The concept is the same.

Say you have a 20k square foot warehouse with 5k SF office.

A comp had 22k square feet with no office.

First I adjust for difference in having a smaller gross area.

Second I could adjust $40/SF for office finish. 22,000 x .25 x $40

Thant makes sense if you are comparing gross to gross. But in my case, the 3,739SF of my space does NOT include the SF of unfinished in my basement. While the 4,600 SF of the Comp does include his basement.

 

[NachoPerito]

Thant makes sense if you are comparing gross to gross. But in my case, the 3,739SF of my space does NOT include the SF of unfinished in my basement. While the 4,600 SF of the Comp does include his basement.

Oh, big difference. I thought the 3739 SF included the basement. You should clarify that.

 

[Pam Wyant]

Thant makes sense if you are comparing gross to gross. But in my case, the 3,739SF of my space does NOT include the SF of unfinished in my basement. While the 4,600 SF of the Comp does include his basement.

That does seem to be the biggest issue. If your acquaintance would allow the appraiser to measure his house that was used as a comp, I would suggest that you contact the lender to see if the appraiser would do so. If he/she refuses, then I would see if you can measure it yourself and take a floor plan drawing to the lender for their consideration. As appraisers, we can only rely on the data we can obtain. Not all will be the same, but if I can obtain better verified data, I would be willing to change the appraisal.

 

[visionlinx12]

Oh, big difference. I thought the 3739 SF included the basement. You should clarify that.

Yeah. My main floor plus second floor is 3,739 SF of finished living space. My basement is another 1700 SF of unfinished space.

Pam,
My friend was the previous owner of the comp house. They just moved out in Dec 2014. But I guess I could go ask the new owners.