What are my peers' adjustment values when appraising $1.7 to 2.1million?

[cdanj]

The same homes here migh

One thing I have gotten in the habit of doing is getting sales and subtracting out the value of the land. Then you know what the contributory value of the improvements is. Then divide by the size of the house and you get a ballpark figure of the per SF adjustment. It is at least a test of reasonableness for the structure size adjustment.

I'll look into that. Its tough when every single house was built at a different time with a different build3er with different quality.
a 1250 sf C3 cape COD with a sun room off the kitchen might sell for more than 1500 sf C3 Colonial with a cramped kitchen next door. How do you adjust for a cramped layout that you can't detect?

 

[cdanj]

It's the high-value small lots where lot size and site characteristics in general are super important.

It's super nuanced around here. Based on what I said in the OP. There are smaller houses on smaller lots, 1/4 mile away on busy streets selling for more because people want to knock down and build a high profile McMansion. And then two blocks away, without any major streets dividing the neighborhood, homes of the same GLA,, lot size and condition are selling for $500,000 more than this one because they are in "Old Country Club" Section.

 

[Joe Flacco]

I don't adjust for it. But I will look for sales with similar functional utility. And if I use a sale or two with inferior functional utility, then I will discuss it and in the reconciliation of the sales comparison approach state that most reliance is placed on comparables x, y, and z, which have additions and offer similar functional utility.

As a matter of fact, I just turned one in yesterday with this same issue.

My most recent comps with additions and similar functional utility occurred 12-18 months ago and my sales in the last 12 months do not have additions. So the report looks wierd, but whatever. It is what it is.

 

[Joe Flacco]

It's super nuanced around here. Based on what I said in the OP. There are smaller houses on smaller lots, 1/4 mile away on busy streets selling for more because people want to knock down and build a high profile McMansion. And then two blocks away, without any major streets dividing the neighborhood, homes of the same GLA,, lot size and condition are selling for $500,000 more than this one because they are in "Old Country Club" Section.

It is not really an "around here" thing. It is like that everywhere. It is just how people behave. My market is like that. It is like that in Boston. It is like that in Bay Area and LA. Same in Seattle. That is just residential real estate.

 

[Overimprovement]

Land in this area is at an extreme premium. Equalized assessed value of the subject is about $600,000 but people are buying $900,000-1,400,000 houses with the same lot and knocking them down.
we are 8 miles from Manhattan with stellar schools.

Then how do you justify $10,000--$15,000 for the first 1 to 2 acres? And you say a home 250' larger in GLA sells for $50k more, which is $200/sqft not counting land, but you only adjust to a max of $100/sqft?

 

[Surf Cat]

I rarely go over $100 sf for GLA and $2 a foot for land. In areas where lot size is important IN the rural areas in NJ I generally do $10-$15,000 for the first 1 or two acres and about $2500 - 5000 per acre above that. depending on the improvements and quality of build.

How did you get those numbers? You had to derive them some how.

You're not going right to GLA or site area differences to adjust are you? You're following the sequence of adjustments, right?

I was going to link some of the popular adjustment programs for you.....but decided against it. You need to learn the fundamentals on how to derive adjustments from the comps you've chosen as well as adjustments from your overall market area.

You "need" to take a class. Here's one, it's just an example. There are many others. Do some research and get on it, stat!

https://www.workingre.com/how-to-support-and-prove-your-adjustments-7-hours-CE/

 

[cdanj]

How the heck are we supposed to know what adjustments would be in YOUR market?

Sounds to me like you need to hire an appraiser. You really think someone from 1000 miles away is gonna give you credible supportable grid adjustments when we don't have ANY data?

You must think an awful lot of us!

No. I just want to know what you do in your market.

 

[cdanj]

Then how do you justify $10,000--$15,000 for the first 1 to 2 acres? And you say a home 250' larger in GLA sells for $50k more, which is $200/sqft not counting land, but you only adjust to a max of $100/sqft?

I based the acreage on what the town tax assessor's in those areas have told me they do.

 

[Tom4value]

If I was a regulator reading these comments I would mobilize the appraisal posse. “What are your standard, peer adjustments for xxxx?” Are you kidding me? Do you put in your work file, “Wxxx from AF uses $4,000 for a bath adjustment.”?

I can see some appraisers don’t do a lot of high-end properties. Remember from appraising 101, for the sales comparison approach, think like the buyer/seller. What is going to drive your asking price/offer price? Without knowing your market, I can say in general for high-end properties, look at location, size and quality of construction. For amenities, look only at the big ticket items. For a 10,000 sqft. 15 room, 6 bedroom, 4.3 bath home you want to make an offer on, are you really going to adjust your price based upon a half bath difference with a comp? Are you really going to adjust your price on the number of decks or fireplaces? I would say no. So why are you making adjustments for those items? All you are doing is showing that you used POA for support.

Same for lot size. Buyers really don’t care for lot size differences except for very large differences. They are looking at quality of landscaping/view/location when comparing properties. You lose me at “$25/sqft adjustment difference”. Show me the receipt! For GLA, can you really show a supportable difference in value between a 10,300 sqft house and a 11,800 sqft house? I bet if a buyer walked through both houses without knowing the GLA they would not even be able to tell you which one was bigger, let alone tell you how much their offer will change.

For a good appraisal for a high-end property, I want to see 3 things; 1. Comps that are comparable in location, quality, significant amenities (pool, tennis court, multi-car garages, etc.). 2. Adjustments only for those of #1. 3. Extensive explanation not only of any adjustments but why you chose your comps. Your adjusted sales prices for 3 comps will not be a $2,000 range. You will have to support your opinion of value with the large dollar ASP range by explaining the strengths and weaknesses of the comps and reconcile.

 

[J Grant]

The adjustments should have some relation to cost - if the houses are C2 and cost estimate $400 a sf to build, a $50 sf adjustment in a comp would be likely too low - $150-$200 sf might be more appropriate. Same thing with lot size and view adjustments - I just did one with a double-size lot, 2 million price range property, the lot size adjustment was 500k. Two sales with similar large/double size lots were included for support.

Every assignment, even within one market area, can differ, and there is no formula.