A few months
back, a client asked me how I developed my neighborhood adjustments. The gentleman had finished reviewing my
report and noticed Neighborhood adjustments had been applied to three of the
five comparable sales. I explained to
him how the adjustment was developed and sent him a copy of my analysis which was
readily available in my work file. He
thanked me several times for my due diligence and then explained the following:
“I’ve asked
several appraisers why they don’t take an adjustment for differences in
neighborhoods. I’ve lived in this area
for more than twenty years and I know differences exist. But every time I ask one of our appraisers
why they don’t do it, they tell me there is insufficient data to develop the
adjustment or there is no way to quantify the adjustment.”
Initially, I
didn’t think much of the conversation.
In all honesty, I was just happy I had the support for the adjustment
and wasn’t in trouble with my client.
But the more I thought about it, the more I realized how unfortunate the
situation really was. Here is a client
who is relying on his appraisers to provide accurate and reasonable
values. But if major adjustments are not
being developed or are ignored altogether, how accurate is the value opinion?
This
conversation was one of a few motivating factors which prompted me to create a
class titled, “Supporting Appraisal Adjustments”. The purpose of this course is
to offer help to any appraiser who may be struggling to develop reasonable
adjustments in the sales comparison analysis.
Likewise, the class will help an appraiser who is seeking a quicker
and/or easier way to develop the various adjustments.
So how do we
determine whether neighborhoods are truly similar and competing and how is the
adjustment developed if they are not similar?
Well…you’ll need to attend the class to find out. But, the good news is the adjustment CAN be
developed easily and quickly. The bad
news…it does require some math. But
don’t let that scare you- I’ve developed a spreadsheet that automates the math
for you!
Our course
offering, “Supporting Appraisal Adjustments”, teaches the logic behind the
adjustments and how to develop and support reasonable adjustments. We walk you through the spreadsheet including
how to input the data and how best to apply the results. Also, we give the spreadsheet to use in your
own practice.
Check out
our website at www.educationresource.com to register for remaining course dates/locations in 2017. Do you have an office
with several appraisers/brokers? Give us a call and we will be happy to come to
you to teach for the day. Look forward to seeing you in class!
