How are adjustments made ?

Appraisers can make quantitative or qualitative adjustments to comparable sales in their appraisal reports.  Quantitative adjustments display actual number adjustments, like $ 2,000, or percentage adjustments like + 5.0% in the report.  These amounts and percentages can be mixed (or used within the same adjustment grid).  Qualitative adjustments are made by indicating a plus "+" or a minus "-" sign to indicate that an upward or a downward adjustment was made.  

Adjustments are made to comparable sales in the sales approach to value, they are not made to the subject property.  When some factor associated with a comparable sale is significantly superior a downward or minus "-" adjustment is made to it, and when a factor is significantly inferior, an upward or plus "+" adjustment is made to the comparable.

It is assumed by many readers of appraisal reports that using quantitative adjustments, like + 5.0%, indicates a greater degree of accuracy in a report since the appraiser knows the exact adjustment amount for each difference identified.  Having been in the appraisal business for several years, I can tell you that most individual appraisers do not know whether their + 5.0% adjustment is accurate.  Paired-sales analyses are used by appraisers to establish these quantifiable differences, however, each appraiser cannot complete an analysis of this type for all of the adjustment factors that they consider.  

Changes in market conditions, or the change in the sales price of real property over time, can be discovered via paired-sales analyses.  Since some properties are sold in almost the same condition as they were a month or several months ago, a paired sales analysis can provide a rate of change that can be broken down by month.  Our firm always uses paired sales analyses to track the upward or downward movement of prices in the market over time.

While we prefer the use of qualitative plus "+" and minus "-" adjustments in our reports to describe most other differences between the subject and the comparable sales, we do at times use the quantitative method.

Contact us with your questions or concerns regarding appraisal adjustments or regarding your specific appraisal assignment in Nevada at 1-702-568-6699.  We can also be e-mailed at grigdon@cox.net.  

Commercial Real Estate Appraisals in the Las Vegas & Henderson, Nevada Area.