Supporting Adjustments with Market Data

Appraisers are analysts, problem solvers, and decision makers who need to make a professional and informed opinion of the value of a property as well be able to communicate their decision-making process. One of the most important aspects of an appraisal is the integrity of the data and decision-making used.  Appraisals must explain clearly why adjustments are being made and clearly state the reasoning for how the adjustments are being made.

Here’s a look at the process FRG requires to validate adjustments when comparing properties in a residential appraisal:


An adjustment is needed when there is a difference between the property being appraised and a comparable property that would impact the sale or rent price

  • Differences that require adjustments to value include building size, number of rooms, condition, parking, or amenities like pools or fireplaces


An adjustment provides an estimated dollar value of the difference

  • Appraisers must explain the reasoning behind that specific dollar value; what makes an adjustment worth a specific amount in that market?

Simply stating that an appraiser is experienced and therefore knows how much things would sell for is not an accepted justification for adjustments in sale price. Every appraiser has their own unique perspective and bias, and it is the responsibility of that appraiser to create as objective and informed an opinion as possible.

How can appraisers remove themselves from the process and create a reasoned explanation for differences in sale prices? Here is an example:

A single-family home with 1 bathroom in a suburb is being appraised, and a sale comparable has 1.5 bathrooms. The appraiser believes buyers in this market recognize the value of an additional half-bathroom. An adjustment will need to be made, but for how much?

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Growth on the Lake: The Power of Green Technology

Over the last couple of years Cleveland has really done a lot to change outsiders’ perception of the city. No longer is the city referred to as the ‘Mistake on the Lake’. In fact, recently I was on an Amtrak train traveling from Washington DC to Baltimore, and in the seat pocket was “The National”, Amtrak’s onboard magazine. And on the front cover of the National was a gorgeous plate of food and the caption “Next Stop: Cleveland – A booming food scene is helping this postindustrial city shake off the rust”. The six-page cover story featured Cleveland’s hippest neighborhoods, celebrity chefs and their restaurants.

After reading the article, I thought to myself, Cleveland really has a lot going for it – exceptional museums, cool neighborhoods, world class healthcare, it has the 2nd largest theater district in the country, stellar higher educational institutions, home of big budget film productions and a championship sports team. And on top of all that, Cleveland is becoming known for making real advances in green technology.

Lake Erie TurbineCleveland, like most metropolitan cities has its environmental issues, whether that be runoff from urban fields or commercial sites contaminated by prior use or contaminated sediments at the bottom of Lake Erie. Cleveland is starting to find unique solutions for these issues.

One of the region’s greatest assets is the Great Lakes, which provide freshwater for drinking, transportation, power and recreation. And 21% of the world’s supply of freshwater comes from the Great Lakes.

So, I am happy that the U.S Army Corps of Engineers (ACE) and the Ohio EPA are working together to find a better solution for where to put the sediment dredged from Lake Erie, a solution that does not include dumping the sediment back into Lake Erie. Recently, it was reported that they are exploring the solution that the Port of Cleveland is using to re-purpose sediment. The Port contracts with a supplier that recycles the dredged sediment and uses some to restore wetlands near the harbors being dredged and sells some of the clean sediment to construction companies to use on their sites. Re-purposing prevented the need to build a containment dike, thus saving the Port of Cleveland $150 million.

Another green technology project in development is the placing of six (6) 3.45-megawatt wind turbines eight miles off the shore of Lake Erie. The goal of putting wind turbines in Lake Erie is to funnel renewable energy into Cleveland’s Public Power infrastructure, enough to generate energy to power 7,000 homes.

Initiatives like these are exciting to see as they build on Cleveland’s strong science and technology competency and continues to diversify the area’s economy. A diversified economy attracts diverse talent from all over the world. The need for more talent can help to increase the area’s population and ultimately increases the need for housing, retail and infrastructure development. All of which are things needed for a thriving city. It’s nice to see ‘Growth on the Lake’.

What’s the Highest and Best Use for My Property?

Professionally, I call myself many things – commercial appraiser, businessman, real estate consultant, but what I really am is an economist.  I have yet to find anything in business that I cannot apply an economic principle to.  And the intriguing thing about real estate is the economic concepts that hide in the shadows.   There is no need to understand the mathematics of optimization or understand the micro economic theory of utility maximization.  One only needs to understand four basic concepts – legally permissible, physically possible, financially feasible and maximally productive.

This brings me to the Highest and Best Use Analysis.  It is based on the economic concepts of utility and substitutions.  The highest and best use of a property determines the utility for a buyer.  A buyer will compare the purchase of a potential property to the purchase of another property with similar utilities. The buyer will ultimately purchase the property with attributes that provide the greatest utility.  As well, the seller of a property will expect to sell his/her property for a price no less than that of properties of similar utility.


The four tests of highest and best use are: (1) legally permissible (2) physically possible (3) financially feasible and (4) maximally productive.


“The reasonable, probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.” Appraisal Institute

Legally permissible primarily pertains to zoning and deed restrictions on a property, taking into consideration whether the existing property is a legal non-conforming use.  For example, FRG completed a highest and best use analysis for a local Ohio school district’s administrative building which was formerly a middle school.  The subject was in an area zoned for single family houses.  The prospective buyer of the property planned to re-develop the administrative building site into multi-family townhomes.  To do so would require a re-zoning.  And the re-zoning required approval from the City Planning and Zoning committee and final approval from the residents of the city.  FRG evaluated the site as improved, assuming the new zoning would be approved, but advised the client to quickly begin the re-zoning process.

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FRG wins contract with the Cleveland Airport system

Feasibility Research Group (FRG) has been selected to provide On-Call Appraisal Services for the Cleveland Airport system.

University Heights, OH (February 16, 2017) — FEASIBILITY RESEARCH GROUP (FRG), a minority owned commercial real estate appraisal, economic market research and consulting firm based in Northeast Ohio has been selected for On-Call Appraisal Services with the Cleveland Airport system.

“We are honored that FRG was selected to provide on call appraisal services for the Cleveland Airport System” said Gregory Williams, MAI – Owner and Managing Director. “The entire FRG team is excited to provide the Cleveland Airport System with the same high quality, expert valuations that our clients expect and greatly appreciate.”

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Know What You Are Buying. Know What You Are Selling. Contamination Effects Property Values.

Recently, while reviewing an appraisal report with a client, he asked why my appraisal report included so much information in the Property Description section. He stated “I am well aware of the ‘description of the property.’ My parents owned this property for decades. All I really want to know is what is it worth.”

Upon review of the report, my client became very interested in the ‘property description.’
He quickly realized that there was a lot that he was not aware of.

My team completes a thorough due diligence of every property we value. In this case, upon environmental review, we uncovered that our client’s property had a contamination conveyance or detrimental condition – meaning a condition which would adversely affect the value of the property. The property sat on land that previously held underground storage tanks which stored petroleum. The tanks were no longer on the site but the groundwater on the site was deemed to be contaminated by benzene. For dwellings located above contaminated groundwater, benzene vapor can migrate through the soil and foundations and effect indoor air quality.


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I’m Ready! Are You Ready for Some Football?

It’s that time of year again. Tonight is the official kick-off of the NFL season with the Super Bowl champion Denver Broncos hosting the Carolina Panthers at the Mile High Stadium.

And after the excitement of the Cleveland Cavaliers winning the NBA Championship and the Cleveland Indians currently leading the American League, it’s only reasonable to hope that this will be the year of the Cleveland Browns. In the 2015 season, the Cleveland Browns finished tied for last place in the AFC, so being the Cleveland Brown’s year, here’s to hoping that they do better than last year.

NFL BlogSince 1999, the Cleveland Browns have played in the First Energy Stadium – a first-class, 67,000+ seat stadium paid for by both public and private dollars. In the United States, there are 226 stadiums with seating capacities ranging from 20,000 to 107,000. And of them, 31 are NFL stadiums – remember the New York Giants and Jets share the MetLife Stadium.

Funding, owning, maintaining and filling stadiums is a tough business and is a business that is reliant on having a marquee primary occupant. And when that occupant leaves, stadiums have little hope for survival. For example, the Detroit Silverdome was home to the Detroit Lions from 1975 until they moved to Ford Field in 2002. Four years after the Lions moved to downtown Detroit, the Silverdome closed and was demolished this past Spring. The majority of NFL stadiums are funded by taxpayers and when the primary tenant moves, the stadium eventually closes and the taxpayers are left holding the bag. Looks like this same scenario will happen in St. Louis. The Rams moved back to Los Angeles leaving the 70,000+ seat Edward Jones Dome empty. Taxpayers will be responsible for paying $12M per year until 2022 for on-going maintenance costs and to fulfill the original construction debt.

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