Two line basement adjustements?

[Walter Skaggs]

In a recent review the original appraiser made two adjustments in the basement category. i.e. across from "basement & finish" the description states 1,300 s.f. and an $8,000 adjustment was made. Across from
"rooms below grade" a separate 780 s.f. description is mentioned along with an additional $8,000 s.f. adjustment. It seems the second adjustment is for the 60% of finished area.

Does anyone else do two adjustments in the basement category and if so how are these adjustments derived. I'm struggling to see how the basement adjustment can be teased into two parts in the paired sales analyses I've done. The original work provided no explanation.

 

[Jim Bearden]

The line actually says:

Basement & Finished Rooms Below Grade

The first adjustment is for the total basement area and the second line is for the amount of finished space. I say what the finished space is but don't say the amount of space. Rather I state what square foot adjustment is, lets say $10 per square foot and leave it up to the reader to calculate if they wish the square foot area.

 

[Lee Lansford]

When and where appropriate...yes, two separate adjustments (one for the size of the basement and the second for the finish in the basement).

Note that here in the area of Chicago and suburbs, basements and their finish can have significant market appeal and contribute to market value.

The general and correct answer...as always...is "it depends...".

 

[deturner]

Basically the same as the others. One adjustment for size and one for finish.

This does take some actual thinking and mathematical calculations. Sometimes there are combined adjustments for the finished area and the room counts (bedrooms/baths). This REALLY takes some thinking.

As per my recent conversation with a client, don't expect them to understand unless you draw them a picture.

DaveT in NC

 

[Ray Miller]

Basement size and then finish.

I try and use only finished basement with homes that have finished basement. Same for homes with or with out basements and partial basements and partical finished basements.

 

[Dave Smith]

Basement adjustments.

I try and use only finished basement with homes that have finished basement. Same for homes with or with out basements and partial basements and partial finished basements.

Ray, that is a good idea in theory but you and I both know that theory doesn't always work, given the comps we have to choose from.

Look at how M&S calculates and reports the cost approach calculations for basements. One $ figure for basement and another $ figure for finished basement.

I do like the others that have responded to your question. I do two adjustments when I don't have the luxury of perfect comps, i.e. identical to the subject with respect to their basements.

Try wrestling with an appraisal when the subject is on a slab, one comp has a crawl space, one comp has a partial basement that is partially finished and one comp has a full unfinished basement. We had that situation last week when we absolutely had no better comps, going back eighteen months and ten miles out and still found only five possible comps. Needless to say the mortgage company didn't like it either. Those are the joys of working in a market where good comps are a luxury we don't always have. We can't use what doesn't exist.

 

[jonathan asbury]

Sometimes I use the two lines to adjust for actual basement area and the other for room count in the basement. ie a house with a 400 sq ft rec room in the basement has value but not as much as a house with 2 bedrooms a full bath and a den (also 400sq.ft.) in the basement. The bedrooms are more valuable as they could generate income or allow for a larger or extended family to live in the house.

"rooms" for rent in my area can go from $400-1200 a month!!!

jonathan

 

[Steve Owen]

I do this the same way the appraiser you are reviewing did it. However, there are other options.

One option is to adjust first for size on the top line and then for finish on the second line. However, not all basements are very amenable to this... in some cases it makes more sense to adjust for the unfinished space on the first line and the finished space on the second (total basement size would appear on the first page and the two sizes on the second would add to it). Just be sure it is clear what you have done. How to do it could depend on the configuration and degree of finish for the subject and the comps... and on the amount of information available.

In the older times, before our MLS specified amount of finished and unfinished basement, we used to interview agents (and sometimes buyers and sellers or appraisers) about what the basement looked like. We knew the amount of finished and unfinished space in the subject, but rarely for the comps. So, we adjusted the first like, on a sq. ft. basis for the size of the basement, and the second line for the actual room count of finished rooms and/or degree of finish, which was not calcuable to a per sq. ft. amount of finished space.

 

[Walter Skaggs]

I appreciate the replies. My market (all the time) is like Dave's recent experience.

I think I understand the methodogy even though its not been specifically addressed. Tell me if I've gotten it.

One way the example I mentioned could be supported would be if pairings of non-basement (crawl space, slab) to unfinished basements indicated an unfinished basement value of $6 per s.f. of basement. Assuming an additional pairing of a non-basement to a 100% finished basement property revealed an indication of $16 per s.f. of finished area then the 780 s.f. of finished basement would be adjusted @ $10 per s.f.

Saying my market in not well refined is probably an understatement. Before I was essentially seeing an adjustment for the amount of finished basement only - not much difference in unfinished vs. crawl. I'll revisit my data. There could be something there after all. Thanks for the comments.

 

[Ray Miller]

Ray, that is a good idea in theory but you and I both know that theory doesn't always work, given the comps we have to choose from.

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Sorry Dave rest of post did not get posted in hurry this morning.