• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Time Adjustments

Status
Not open for further replies.

hal380

Senior Member
Joined
Apr 26, 2003
Professional Status
Certified General Appraiser
State
Connecticut
I typically apply a time adjustment for sales that have occured beyond the 6 month guidline. The rate of adjustment depends upon the market area.

Here is a real situation:
sale 1 & 2 occured within 6 months prior to the effective date of my report.
sale 3 occured 8 months prior to the effective date.

Sales 1 & 2 received no adjustment
Sale 3 was adjusted at the annual rate for 2 months to bring it into the 6 month time window.

Logic: If I gave sale 3, 8 months of adjustment and no adjustment for sales 1 & 2 which occured 3 & 5 months prior I would be skewing my final adjusted values.

I really dont want to split hairs, but am open to other thoughts on this.

Regards to all

Hal
 

liznindy

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

It depends upon your market....I typically don't apply time adjustments (even for sales over 6 months old) unless I have market evidence to support that adjustment. But when time adjustments are applied (when the market shows the appreciation) it is my opinion that these adjustments should be applied to all sales except for very recent ones........unless, of course, the market appreciation occurred only in the distant past but not in the nearer past.

Clear as mud?!
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
If you adjust for 8 months but not for 6 months, it appears that you are arbitrary in your time adjustment. Either the market is appreciating at a rate requiring a time adjustment, or it's not. Example: In an appreciating market, assuming a 0.5% per month, I can see not adjusting for 1-2 months, but after that, especially on a larger home, I can see making the time adjustment even if it is less than 6 months. However, if the appreciation is 1% over 6 months, why adjust at 8 months and not at 6 months?

It all depends on the market.

FYI, I haven't made a positive time adjustment in 2 years. I have made negative time adjustments, however. Hopefully, things will turn around in the market. Right now, I see values at 1999 levels for mid-range homes ($200-450).

Roger
 

Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
I try to avoid time adjustments even when they are warrented (here come the flames) simply because underwriters hate to see them, and I ALWAYS get 500 phone calls when I put them in.

When I do use them, I adjust if it closed a month ago, or 11 months ago. My basic process is this......With the commercial record here in CT, I can check to see the % rise in home sales year over year - I use this as a baseline for what my adjustment will be - For example, if the sales show an increase of 5% year over year, I take the sales price of the comparable, and figure out 5% of it, then divide by 12 - gives me an approximate monthly adjustment. Multiply that by however many months ago the property sold, and bam, I'm there.......never had an underwriter or review appraiser question me......probably can't figure out all the math!!!!!!!!
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Wellllll.... no way I'd be using any published figures for the overall market. I would give primary weight to the newest comps or work up a proof positive trend for that particular sub-market maybe.

We have sub-markets here that are rising in values, declining in values, and stable. Keeps my brain thumping along.
:eyecrazy:
 

Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
Sorry, see where that was vague........they do break it down town by town, and as I said, it is still a discretionary (sp?) adjustment for me. If I don't think it's warrented, I will not use it, and esometimes, even when it looks like it is, I will still avoid using them, just because they look so damn bad on appraisals.........across the board positive adjustments?? no one likes them!!!!!!!
 

Tater Salad

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Missouri
I think I see what Hal is saying: without a sale that took place yesterday, do we know that there was any appreciation in the past 6 months or just in the 2 months between the time of sale of the older comp and the more recent comps. Is that right, Hal?

I think I would do like Pam says and just weight the newer comps more in final rec.

Man, I wish you hadn't asked this question. It never fails, whenever somebody here has a question, it happens to me in the near future.
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
Hal,
Leaving the issue of whether time adjustments should be avoided altogether alone, just think of adjustments in general. You should not deliberately adjusting wrong. You are sytematically biasing your own appraisal - not for someone's personal interests - but it is self biasing just the same.
 

hal380

Senior Member
Joined
Apr 26, 2003
Professional Status
Certified General Appraiser
State
Connecticut
I think I see what Hal is saying: without a sale that took place yesterday, do we know that there was any appreciation in the past 6 months or just in the 2 months between the time of sale of the older comp and the more recent comps. Is that right, Hal?

Yes Carol this is what I am trying to say. And I too dislike time adjustments as I feel they could be subjective and are viewed with suspicion. With our current very active market I seldom need to uses sale beyond 6 months. However recently I was doing an unusual home in an exceedingly small town here in Ct and I did have two fairly recent sales, and 1 that was 8 months out. So I did a 2 month adjustment to bring that sale within the 6 month window.

If I had given 8 months of adjustment to the one sale and the other sales 0 months I feel I would have skewed the results. Maybe adjust them all to bring them to the effective date????

Regards and thanks to all who have responded
 

Dave Brigle

Sophomore Member
Joined
Dec 1, 2002
I have to agree with Pam. I have always disliked the "assume 5% average increase" then apply the math approach. Every sub-market is different, time of the year is a big factor. I try to avoid time adjustments unless it is a spread of many months. Being a review appraiser, I can say that time adjustments would catch my attention, are they reasonable?
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks