Time Adjustments

[Fatrodent]

Hello,

I am getting more and more clients who are requesting time adjustments for comps that are older than 3 - 6 months. Have you had experience in making time adjustments for residential properties? What is the best way to find data that warrants these adjustments?

 

[CANative]

Why would time need adjusting unless your clock was wrong? Think of it as an adjustment for chaning market conditions and it's easier to grasp the concept.

Yes, I often have to make adjustments for changing market conditions because there are almost never enough sales of comparable properties.

 

[CURT VAN HOOSER]

Squeaky,

Ditto what Greg said. Assuming you have indicated a change in market conditions (i.e.. decline) you should be able to determine the rate of decline and apply it to a monthly adjustment. There are varying schools of thought on just how that is done and applied so you may want do a forum search on the subject as it has been addressed before. Then, you can peruse the responses and make your own mind up on which method works best for you.

 

[Artemis Fowl]

All methods invlove analyzing sales over time. Sometimes a large number of sales. Median, price per square foot, foreclosure statistics, financing availability, same property resale, listing vs pending, list to sale price, published analyses, on and on. There are many indicators and methods that can be used to identify trends but only you can decide which are the most appropriate for your market and the assignment. Most important is to provide support for your conclusions. Explain how you arrived at your adjustment.

 

[The Bob]

If values were stable over the past 3 months, but showed a decline from a year ago, would you still adjust for a comp that was 60 days old?

Values rarely decline in a linear fashion. If you have enough data, graph out your sales and you will likely see a market that pulls back, then goes sideways, then pulls back etc...

The only way to find out for sure is to do your own analysis. I run an Excel analysis on every report. It took some time to first set it up, but now I can define an area in MLS, download xx months of data, import to Excel and run a macro. Now, it takes a few mimutes. If any one questions your conclusions, you have hard data to support it.

 

[Doug Wegener]

Using regression analysis to determine market adjustments

Hello,

I am getting more and more clients who are requesting time adjustments for comps that are older than 3 - 6 months. Have you had experience in making time adjustments for residential properties? What is the best way to find data that warrants these adjustments?

Using statistical methods and regression analysis is the best, easiest and more fastest way to determine this.

George Dell is currently teaching a class where he goes over this. There is a how to file in the Inland appraiser forum files section if you want to join. Its free and open to all.

 

[Metamorphic]

I put graphs like this in the report

That's a big export of MLS data put into excel and graphed and trend lined.

 

[toddmallard]

Or just do what my old skippy boss does. Find 3 comps, regarless of sale date that have the same or close sales price, no matter where you have to go to get them, than mark the market as stable.

Sounds like a joke, But true.

 

[bruha76]

I have a situation, where the lender REQUIRES ALL comps over 90 days to be given a time adjustment, if you check the market as declining of course. Im in South Florida, so 99.9% of my reports are declining. Usually I go by a percentage from the original sales price (usually 1-3%), then mulitply that % to how many months the comp was removed from the 90 days. Just make sure it makes sense on the grid.

 

[Ariba]

I put graphs like this in the report

That's a big export of MLS data put into excel and graphed and trend lined.

What does the graph tell you? Houses sold in 04/01/2001 for $300,000 (DOM 0) are now selling for $100,000 03/28/2008 (DOM 90)?

What am I missing? What about, price range, SF, Style, view, neighborhood, etc?