Trainee question

[Zoe]

You could back into each one using cost approach. Take a 1 or 2 year old house (resale) vs a brand new one. It might could work. Cost approach is fine to support adjustments in sales comparison approach.

The thing you don't want to do is double dip on condition and age.

 

[ZZGAMAZZ]

Agreed w/most here. Typically, age is accounted for in the market via condition/effective age. That said, there ARE differences in housing styles based on age - tastes and preferences change over time, so that a home built in 1980 will most likely NOT look like a home built in 2010 (different room sizes, more open feel, etc.). This, however, could be accounted for (if one has to venture into this area for adjustment) in the functional utility field OR the YB field.

"The bulk of Industry research reveals that buyers typically respond more so to condition than to the actual age of a residential improvement, per se, presuming that the construction dates of subject and comparable reflect similar construction technology, design, and functionality. Consequently, adjustments of xxxxx% affected comps either 10 years older or newer than the subject..."

 

[George Hatch]

You develop age adjustments by making comparisons between groups of properties of different ages. Age doesn't just affect the condition. It also affects the designs, floorplans, and sometimes the neighborhoods where properties of similar age were built out with.

 

[Terrel L. Shields]

So here we are asking you guys which methods you use to ascertain an age adjustment or if you make them at all

Each appraisal is different

agree

Typically, age is accounted for in the market via condition/effective age.

Age - Condition is Effective Age. Chronological age is not the same. The issue of actual age to me is an issue of style contemporaneous with the time the house was built. So, while a 1995 house might have a 25 year effective age same as a remodeled 1935 home, they are not good comparables.

But to justify the effective ages I use Epley's method in a sensitivity analysis to develop an opinion of effective age for each comparable... like this
Threw this together as an example. You have to make an observed effective age determination, then you can calculate an adjustment via sensitivity. I will make the EA determination on the basis of the net for the building after land and other items are deducted compared to the replacement cost. That gives the adjustment.



Again, EA of the comps might look like this