Weighted sales reconciliation methods

[PropertyEconomics]

OK,

you have three adjusted values.

$300,000 $305,000 $310,000

If comparable #1 is “more similar” to the subject, what is you opinion of value and how did you reconcile the three values if not by weight?

You kinda missed the whole point .. but thats cool ... I will let you decide ... we were talking about SPECIFYING WEIGHTED AVERAGES ... and my post stands.

 

[mark hurlock]

Why would you do that? Do you know how the algorithm in your software works and can you explain it to the intended user or better yet your state appraisal board?

It is my understanding the program simply weighs based on the percentage of adjusted values which is why I stated it is only used when I have NO particular reasoning to disagree with that approach.

I complete plenty of appraisals with similar comps that deserve no particular consideration other than the amount of adjustments. If my opinion is only weighted by adjustment percentages, why would I not consider the recommended value?

That is the reason the tool is offered. It is NOT intended to replace your judgment, like some on this board imply.

I find it particularly damaging to the credibility of this profession that appraisers would believe their opinion can simply be stated without quantifying the basis for their conclusion.

The arrogance though shall not be questioned of thy weighted percentage is astonishing.

It wreaks of good old boy days gone by.

 

[mark hurlock]

You kinda missed the whole point .. but thats cool ... I will let you decide ... we were talking about SPECIFYING WEIGHTED AVERAGES ... and my post stands.

And I am asking you to specify how you reconciled your final value.



My post also stands.

 

[timd354]

It is my understanding the program simply weighs based on the percentage of adjusted values which is why I stated it is only used when I have NO particular reasoning to disagree with that approach.

I complete plenty of appraisals with similar comps that deserve no particular consideration other than the amount of adjustments. If my opinion is only weighted by adjustment percentages, why would I not consider the recommended value?

That is the reason the tool is offered. It is NOT intended to replace your judgment, like some on this board imply.

I find it particularly damaging to the credibility of this profession that appraisers would believe their opinion can simply be stated without quantifying the basis for their conclusion.

The arrogance though shall not be questioned of thy weighted percentage is astonishing.

It wreaks of good old boy days gone by.

Is that how the program works or is that your understanding of how it works? Is it weighted by the percentages of gross adjustments, net adjustments or some combination of the two? Do you really know? Your answer sounds like you are not really sure.

I personally do not believe in simply using the suggested value as the default value unless you have a reason to disagree with it. Adjustments are not widgets that can simply be used to weight comps based on strict adjustment percentages. In my experience, I have found that some adjustments are more important than others. I also find that adjustments for some items are more easily extracted (and likely more reliable) from the market than other adjustments and these are just some of the reasons that I believe that the appraiser's judgment is of paramouint importance in deciding how the comps should be weighted. Of course the appraiser should explain how the adjusted values of the comps were reconciled - and doing so is not simply stating a value without quantifying the basis for the conclusion as your post seems to imply.

 

[mark hurlock]

Is that how the program works or is that your understanding of how it works? Is it weighted by the percentages of gross adjustments, net adjustments or some combination of the two? Do you really know? Your answer sounds like you are not really sure.

I personally do not believe in simply using the suggested value as the default value unless you have a reason to disagree with it. Adjustments are not widgets that can simply be used to weight comps based on strict adjustment percentages. In my experience, I have found that some adjustments are more important than others. I also find that adjustments for some items are more easily extracted (and likely more reliable) from the market than other adjustments and these are just some of the reasons that I believe that the appraiser's judgment is of paramouint importance in deciding how the comps should be weighted. Of course the appraiser should explain how the adjusted values of the comps were reconciled - and doing so is not simply stating a value without quantifying the basis for the conclusion as your post seems to imply.

http://www.northamericanassociation.com/appraisalarticles/reconciliationleighpollet.html

 

[residentialguy]

[URL]http://www.northamericanassociation.com/appraisalarticles/reconciliationleighpollet.html[/URL]

That is not the definition of “reconciliation of value” – just a blind opinion with no essential supporting documentation

Non sequitur to this discussion. No one is saying such a thing. And $2,000 variance from 155,000 being less valid?....again, a joke. The day that an appraiser says he's within 1% of market value is the day he'll be proved wrong on every adjustment he makes or didn't make. No one goes to court and says "it's just a feeling I have" for support....well, besides Anon.

 

[mark hurlock]

Is that how the program works or is that your understanding of how it works? Is it weighted by the percentages of gross adjustments, net adjustments or some combination of the two? Do you really know? Your answer sounds like you are not really sure.

I personally do not believe in simply using the suggested value as the default value unless you have a reason to disagree with it. Adjustments are not widgets that can simply be used to weight comps based on strict adjustment percentages. In my experience, I have found that some adjustments are more important than others. I also find that adjustments for some items are more easily extracted (and likely more reliable) from the market than other adjustments and these are just some of the reasons that I believe that the appraiser's judgment is of paramouint importance in deciding how the comps should be weighted. Of course the appraiser should explain how the adjusted values of the comps were reconciled - and doing so is not simply stating a value without quantifying the basis for the conclusion as your post seems to imply.

Tim,

please don't let Total replace your common senses. Don't know why you keep arguing that point when I NEVER said it was a replacement for your opinion. Do I really need to keep saying it is your responsibility to determine when it is appropriate to use weighted percentages? If you do choose to use this weighting method and state your percentages in your report, I suggest you make sure you understand the calculation as you might get asked to demonstrate your conclusion as the OP has.

Hope this helps with your misunderstanding of how Total calculates based on the adjustments made to your comps.




http://help.alamode.com/appraiser/total/default.htm?turl=usesuggested.htm

 

[J Grant]

It is an interesting tool...in all the years I had Win Total I never used it! I checked back on a few non complex reports...their suggested value and my opinion were within a few thousand of each other. I did not bother checking complex reports but will at some point for interest sake.

I would never rely on it , but I agree it is a useful tool just to check your own value against. It would seem to be more reliable on simple reports with minimal or straight forward adjustments .

 

[Mile High Trout]

This thread is interesting and thought provoking. Ever since I've learned that this weighting issue is the Achilles heel of appraisers in the review/underwriting, I've gone with the straight line average non weighted approach myself, in most instances.

You know I had a thorough post, but baby pulled the power cord. Bummer man. So here it is again in a nutshell.

Your adjusted end values in the grid already 'carry the weight'. Nothing good comes from keeping net/gross down and applying weighting to already adjusted valuation figures instead. The grid is there to build them up and break them down. Variances in housing is adjusted back to align with the subject, so unless you've got an a-typical comp that does not fit into your static adjustment scheme, you don't need to weight comps who's adjustments already carry the weight of market differences. Even then if you've got one comp that provides a false value indicator through adjusted sale value due to your static adjustments approach across all comps, that comp probably deserves a variance adjustment, or stiff line item adjustment to truly account for the market difference in the grid. So weighting extra on comp #1 does not make much sense, since if you've adjusted all comps appropriately, the final adjusted sales values should all be brought up or down to properly align with the subject.

Wayne, you've got a $100k variance there from comp 1 to comp 4. Why is that? Perhaps 1 needs brought down, and 4 needs brought up. Having an adjustment scheme that provides better streamlining of end adjusted sales values is a great approach, because it indicates that you've used the grid properly and used grid adjustments to properly balance the market examples. Having a 100k variance with your end adjusted sales values which is about a fifth of total value in that value spectrum indicates that the market carries a 20% potential value variance and 1 comp seller made out like a bandit compared to 4 comp seller who got succered out of a decent sales payday.

You know the weighting is already in the grid. Only if a necessary comp really was out of line but still needed to be in the grid, would weighting be applied if the standard adjustments did not bring streamlined end values. Even then I'd prefer a steep net/gross and steep line item adjustment because that's just simpler for readers to digest. And what exactly would be the analysis performed to extrapolate that weighting variance? Why not just do that same analysis to extrapolate the market difference for the individual factor and apply that in the grid instead?

Where does the weighting come from? The automated software seeks to apply auto weighting for instances of variance against the norm. If one comp has an excessive sq ft variance, the software can auto weight that comp a little. So I've always compared the auto indicated value to the straight line average, and used the one I felt most appropriate, which is almost always the average. When the 'weight is carried' in grid adjustments, that's simpler for the reader to comprehend then an additional final weighted approach, and you get much less kickback on an averaged approach.

____________________________

 

[Highlight17]

This thread is interesting and thought provoking. Ever since I've learned that this weighting issue is the Achilles heel of appraisers in the review/underwriting, I've gone with the straight line average non weighted approach myself, in most instances.

You know I had a thorough post, but baby pulled the power cord. Bummer man. So here it is again in a nutshell.

Your adjusted end values in the grid already 'carry the weight'. Nothing good comes from keeping net/gross down and applying weighting to already adjusted valuation figures instead. The grid is there to build them up and break them down. Variances in housing is adjusted back to align with the subject, so unless you've got an a-typical comp that does not fit into your static adjustment scheme, you don't need to weight comps who's adjustments already carry the weight of market differences.

In theory, the above has some validity, but in reality every adjustment inherently comprises an element of judgment, therefore, the greater the adjustments overall (on a gross basis), the less reliable a comp becomes (otherwise, there would be no difference between 'sales' and 'comps' since theoretically anything could be reliably and equally adjusted to an exact substitute for the subject regardless of its differences). The cummulative nature of the judgment and subjectivity in the adjustment process logically dictates that those comps requiring the most adjustments generally result in the least reliable indication of value. For this reason, if one is to apply a weighting (or emphasis) on certain comps after adjustments, the most logical means to do so would be to base it off of total gross adjustments.