Time Adjustments

[Austin]

Simple answer: If you have to make a time adjustment for a six month old sale you don't need an appraisal. Have you ever heard of normal random market price variance? It is accepted by the text books in the best of markets that it is never less than +- 5% so how can you support a time adjustment of that much or less? It is really not a time adjustment, it is a number hitter adjustment just like design and appeal, view, etc.

 

[Richard Carlsen]

Sometimes we, as part of what we do, have to be arbitrary.

As for time adjustments, I currently do not consider doing any adjustments for any sales under 1 year. If the sale is over a year, I will use the lower end of the indicated appreciation for that market area.

In other words, I tend to be very conservative on time adjustments. The reason is that we have fewer sales than say a market with 3 million people. Therefore, the selection of comparable sales is more limited. With fewer sales, each sale is more suseptable to the random market variance as noted by Austin.

In fact, since most of the market areas I service have been nearly level in values for nearly two years, a date of sale adjustment is not called for. If say our waterfront properties were to return to say 8 to 12% annual growth rates then I might consider doing a small percentage adjustment, something like 3-4%, for sales over 6 months.

This is an area you have to look at and decide for yourself. The important part is to be consistent in what you do from appraisal to appraisal.