Square footage adjustment

[Donna Quixote]

I have spoken with another appraiser and we view square footage adjustments differently, so I am asking you to weigh in and let us know at what square size difference do you make adjustments for? Is it a percentage of the subject size, or a number like 50 or 100 sf? Or do you make a square foot adjustment for any size difference?

So, to end this debate, what say you?

 

[Pilgrum]

Total dollar. Less than $1,000. Zero adjustment. Less than 100². Zero Adjustment.

 

[Mr Rex]

It depends. 100sf in a house under 1500sf is another BR.

 

[Mark K]

So, to end this debate, what say you?

I say it depends on the individual house. House size, age, price range, room count, etc. all come into play whether or not I make a size adjustment or at what threshold the adjustment is made.

Having a set rule for all properties is a mistake IMO.

 

[Donna Quixote]

It is disappointing to see how many read this post but only three responded. I gave the percentage option because an adjustment for a 800 sf house would not be the same as an adjustment for a 4,000 sf house, as an answer to the previous post.

 

[Pam Wyant]

I use an adjustment per square foot, which varies according to the price range, rounded to nearest $500, with no adjustment for anything under $500. There aren't many high dollar houses in our area, average prices run $50,000 to $200,000.

 

[Riick]

My rule of thumb thinking is:
For typical size houses (1400-2000 sq.ft ??) people cannot "see" gain or loss
of 100 sq.ft. *if* room count remains constant.
Extra/Less GLA gets lost in the shuffle of slightly larger rooms (plural).

YMMV

/

 

[ucbruin]

It is disappointing to see how many read this post but only three responded.

Why be disappointed? Isn't the politically correct answer: depends/paired sales/market data?

I'm not trying to be argumentative or a flip, but no one wants to admit that they rarely do these things. No one wants to admit to applying "A" formula for most if not all properties.

 

[Mike Garrett RAA]

I have a formula developed over more than 30 years experience in my market. It's tied to the base value of homes for the appraisal. If the median value in a neighborhood is, say $150,000 I might use, say, $20 a square foot as a unit of comparison. If the median value is, say, $250,000 I will use, say $25 to $30 a square foot. If the median value in a neighborhood is, say, $300,000 to $350,000, I might use $35 to $45 per square foot. It all depends on what the data is telling me.

I totally concur with not making an adjustment of less than $500 and also rounding my adjustments. In lower priced properties, rounding to nearest $100 makes sense. In higher priced properties you might want to use $500 or even $1000. I do the same with my value conclusions and round to the nearest $1,000 in lesser priced properties and, say, $5,000 in higher priced properties. When you get into much higher priced neighborhoods that can be $10,000 or even $25,000. Why, you say?

Because that is what the market has taught me. Buyers often think in terms of $1,000, $5,000, or even $10,000 increments...not, say $500 or $300....AT LEAST IN MY MARKET. Always ask yourself..."is it reasonable, supportable, and what my peers might do?".

Here is another point I just proved. IN MY MARKET basement or below grade is quite often used as living area. If I use, say, $25.00 a square foot for a GLA adjustment I might also give the below grade the same adjustment if it is being used as living area; however, I break it down this way:

Lets say the subject's lower level is 1,000 square feet and the comp's lower level is 800 square feet...I might make a line 1 (below grade) adjustment of, say $3,000. Now the subject as 900 square feet of finished area and the comp has 600 sf of finish...I might adjust that 300 sf difference at, say $12 a square foot or $3,600 to the total adjustment for the below grade would be $6,600. It's not always that simple but the concept works well. Especially helpful when one property has a finished basement and the other is unfinished. In our market we typically adjust for square footage and not room count. That can be another issue to discuss later.

Hope this might be helpful.

 

[residentialguy]

Depends on the house and the reliability of data. Won't make small adjustments. Definitely round to at least $500 and sometimes up to $50,000