Weighted Adjustment?

[Peggy Wright]

Hi all, newbie question for you. After completing the grid, is it allowed to add weighted value to one or two of the comps, because it is more similar to the subject? For example, One comp in a neighborhood, have to go .5 away for other 3 comps. After the adjustment, in reality, the other 3 are higher in value than the ones in the subject neighborhood. so, to put numbers to it..........c1 = 114k c2 = 118k c3=118k c4=117k. Do you all automatically add the three and take the average, or do you weight the average to c1? Theoretically, if I adjusted the grid right, c2-4 would be more in line with the c1, but after really hammering over it, that is the way it falls out and my sup agrees. So, what to do? I really feel like comp 1 is more in line, but there just aren't any other comps there.

 

[wyecoyote]

Peggy,

I typically will weight more value to one or two comps and explain why I am weighting them over the others.

IE in your case you have one plat sale and 3 from the surrounding area. Thus, I would simply right something like this in my final reconcilation. Comparable sale 1 in the sales comparison approach to value was given most weight in the final reconcilation of the sales comparison approach to value for the following reason: 1. Comparable sale 1 is located in the subject's plat.

Easily explained what you did and you disclosed what your final reconciliation of the sales comparison approach.

Ryan (i hate not having spell checker :twisted: )

 

[Paul Shraga]

Peggy,

What Ryan says makes sense.

Just curious for my edification and such....so, what is your final number gonna be..somewhere around 115K or so ?? or if the sales contract says the buyer is paying $115,400 you'd work that in to say that price designates appropriate market value due to current market conditions etc. ? ... just wondering...

Thx.

Paul

 

[Pamela Crowley (Florida)]

"Primary weight given to sale #1 as it's most similar to the subject and located within the subject project."

Seems to me that it's rather obvious that a location adjustment might be in order on this one. Your choice. What are the differences between those 2 projects?

 

[Austin]

Skewing the final value conclusion based on one sale and then calling the process "weighting" seems a bit of a contradiction of meaning to me. In my lexicon weighting means adding more sales to determine the most probable price estimate. Then too, those reconciliation methods like weighted averages, arbitrary dollar per square foot adjustments, etc., smack of AVM to me. If it has an algorithm versus data analysis it is an AVM and using weighted averages is an algorithm.

 

[Dee Dee]

Hi Peggy,
Assuming that there are no other reasonable comps in the subject neighborhood, and that you haven't chosen the highest sale in that neighborhood as comp one and then gone into a higher-priced area for additional comps to nudge the value......I'd say that Pam's approach would be the way that I would go.

 

[walt kirk]

I always comment on how much weight I give to the comparables i e (Comparable #1 is given most weight because it is located next to the subject property) or ( comparable # 3 is given least weight because it is in superior condition to the subject) My most common comment is "all comparables given equal weight".

 

[Peggy Wright]

Thanks for the great responses. I chose the only subject in the area that had sold, no others reported. I was inclined to make the value lower, but my supervisor just took the average of all the comps together, and ammended what I did. Not saying he is wrong, just wanting different viewpoints. I thought I had done it right, but hey, I'm a trainee!

 

[Mike Garrett RAA]

It figures that Austin would want to create an AVM out of it.

The appraisal is not perfect...if it was you wouldn't need an appraiser.

The adjusted values of the comparables represents a "value range". Your final value conclusion should be within that range. That isn't cast in bronze either. Lets say your comps all adjusted to $114,000 and your contract is $114,500. You could go outside of the range and give consideration to the contract as a good indicator of what a ready, willing, and knowledgeable buyer would pay. Some appraisers would make a small time adjustment, if warranted.

Back to this case. You NEVER average. Lets say the comps came in at $113,000, $115,000 and $116,000. You could trend to either the lower end of the value range, based on the current market or you could trend to the higher end of the value range based on the market. Better yet, you could come in right in the middle at, say $114,000. This is the appraiser's "best judgment" after studying the market.

In your case I would comment something like this. "All sales were given consideration; however, I have weighted sale #1 as it is closest in location and most similar to the subject".

Remember this...."the best comp is the exact same model, next door, that sold yesterday". From there it is all down hill! Wanna be real popular?.....come in $500 below the contract and see what happens :rofl:

 

[Peggy Wright]

Mike,

Thanks. I have to tell you, I'm not real popular right now. I'm new, and I understand the Refi business. I've lost more than one customer because I didn't meet value. All I can say is at least they are people I'm recruiting, and not my sup's existing customers. I'm at an advantage, this isn't my sole income. That doesn't mean I don't want to make them work, I do. I am just very aware that credit card debt does not increase the value of a home!

That brings me to another question. One thing I have been doing, is when an order is sent in, I do as thorough a search as I can BEFORE I go out. If I know no way, or RANGE of this to this, I call the LO and tell them, and ask "do you want me to proceed?" Do you all do that? Or do you just do the assignment, met or not?