Time Adjustments

[Ariba]

What do you base your time adjustments on for dated sales? Simple answer, what does the market tell you? However, the answer is not that simple. It depends on what chart you use and the time adjustment could vary significantly. For example the month-to-month show a declining market starting in December, the 3-month rolling trend shows basically a stable market, the 6-month rolling trend shows 2.5% appreciation for the months of April, May, and June, and the 12/month rolling trend shows 1% appreciation for the year. Do you adjust for dated sales in a straight line, based on the yearly trend, no matter when the sale occurred, or do you base the adjustment on the % of when the sale occurred? Lastly, what box do you check, declining, stable, or increasing?

 

[TMG]

I use the 1004ms form, and base the percentage on which category the sale fell under. i.e. 0-3mos, 3-6mos, 6-12mos.

Note: Spark software does them for you. After you provide the data and verify the results.

 

[shrubberyvaluation]

I use the 1004ms form, and base the percentage on which category the sale fell under. i.e. 0-3mos, 3-6mos, 6-12mos.

Note: Spark software does them for you. After you provide the data and verify the results.

I'll have to look for the 1004ms form and give it a look. I'm ashamed to say I never heard of it. Normally I just use data from comparable sales. I wouldn't go by a zipcode because you can have different trends for fixer uppers where the typical buyer is an investor, properties where the typical buyer is a first home buyer, higher end custom homes, and submarkets etc.

 

[ZZGAMAZZ]

I use the 1004ms form, and base the percentage on which category the sale fell under. i.e. 0-3mos, 3-6mos, 6-12mos.

Note: Spark software does them for you. After you provide the data and verify the results.

TMG: It seems that sometimes the Spark "price" and "price-per-sqft" competing sales charts don't correspond with the 1004MC data. I often wonder why the charts aren't polynomial to reflect the monthly ups-&-downs, rather than linear, although I'm not familiar enough with stats to understand why a user would select one type over the over. Got advice????

 

[Terrel L. Shields]

I like to do a plot of MLS sales using a lot of sales over a long period. Then I can plot a trendline. A running average and you can go month by month

I do categories as there is a different rate for land, residences and commercial property.

 

[ZZGAMAZZ]

I'll have to look for the 1004ms form and give it a look. I'm ashamed to say I never heard of it. Normally I just use data from comparable sales. I wouldn't go by a zipcode because you can have different trends for fixer uppers where the typical buyer is an investor, properties where the typical buyer is a first home buyer, higher end custom homes, and submarkets etc.

1) you should base trends on the contract dates of comps rather than the sale dates;

2) Remember that the 1004MC is designed to report "competing" properties, which must correspond with the top of Page 2, although the Page 1 market trends pertain to the overall neighborhood rather than competing sales only. [Took me about 10 years and dozens of hours on the AF to figure that out.]

3) The 1004MC is no longer required by FNAME. Most every appraiser hated it for a decade, but like TMG says, it's a great tool that provides a rather down-&-dirty perspective of 12-month market trends, if you select the appropriate data upon which it is populated, although most MLS sites allow the user to print a facsimile of the 1004MC, which easily can be transcribed.

 

[shrubberyvaluation]

1) you should base trends on the contract dates of comps rather than the sale dates;

2) Remember that the 1004MC is designed to report "competing" properties, which must correspond with the top of Page 2, although the Page 1 market trends pertain to the overall neighborhood rather than competing sales only. [Took me about 10 years and dozens of hours on the AF to figure that out.]

3) The 1004MC is no longer required by FNAME. Most every appraiser hated it for a decade, but like TMG says, it's a great tool that provides a rather down-&-dirty perspective of 12-month market trends, if you select the appropriate data upon which it is populated, although most MLS sites allow the user to print a facsimile of the 1004MC, which easily can be transcribed.

1) yes

2) Market trends are suppose to match what is on 1004MC, the form is misleading.

3) I wish it to be gone forever. Hopefully 1004ms is something new and improved.

 

[alebrewer]

I use a combination of macro indicators (FHFA HPI for instance), 1004MC data, and grouped data (paired sales) analysis, and reconcile all that data into a supportable trend. When applying market adjustments, I base the adjustment off the contract month, not the settled month. In my market we're still at about 1.5% / month - pretty much across all property types and price points. Although, admittedly, we don't really have an 'upper end' price point. 90% of the homes in my market are in the $200k to $500k range.

 

[alebrewer]

although the Page 1 market trends pertain to the overall neighborhood rather than competing sales only. [Took me about 10 years and dozens of hours on the AF to figure that out.]

Incorrect. The 'One Unit Housing Trends' section of P1 should reflect only those properties the appraiser deems comparable to the subject - IOW it should match the 1004MC and the top of P2. Per the Selling Guide:
"When completing the One-Unit Housing Trends portion of the Neighborhood section of the appraisal report forms, the trends must be reflective of those properties deemed to be competitive to the property being appraised." Bold and italics added by me.

 

[alebrewer]

3) The 1004MC is no longer required by FNAME. Most every appraiser hated it for a decade, but like TMG says, it's a great tool that provides a rather down-&-dirty perspective of 12-month market trends, if you select the appropriate data upon which it is populated, although most MLS sites allow the user to print a facsimile of the 1004MC, which easily can be transcribed.

Although it had/has it's shortfalls, I'm disappointed they no longer require it. At the very least, it forced appraisers to actually perform a market analysis.