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:

Why?

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

How?

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?

Read More

Greater Cleveland RTA: Saving Time and Money

It’s a horrible feeling to think you are going to miss the last direct flight home. This was me, a Sunday evening last month, as I sat in traffic in Atlanta on I-85 attempting to travel 30 miles to Hartsfield-Jackson International Airport. Google Maps informed me that due to an accident, my originally scheduled 45-minute drive would now take 2 hours and 15 minutes. That extra hour and half added to my commute was the time allocated to return a rental car, get through security and tram it to my gate. As I crept along, all I could think about was how much I wished I’d taken the MARTA (Metropolitan Atlanta Rapid Transit Authority).
Usually when I travel to the greater Atlanta area, my transportation preference is the MARTA. During the week, MARTA trains leave a station every 10 minutes and on the weekend every 20 minutes. On top of that, my ride from the last stop on the red line to the airport takes about 45 minutes and costs me $2.50. Quite a savings in time and money.

Read More

The Mall – Still the Best Place to Buy a Gift.

Yes, the mall is still the best place to buy an anniversary gift, especially if your wedding anniversary is the day that you are doing the shopping.  I recently celebrated my wedding anniversary.  And as I have every year, I purchased my wife’s anniversary gift just in time.

BeachwoodPlaceThis year, I found myself traveling to three very different malls – Beachwood Place, an enclosed shopping mall; Legacy Village, an open-air lifestyle center and Eton Chagrin Boulevard, a mixed use boutique retail, dining and office space; all of which were no more than 4 miles apart.

Despite the rise in online purchases, shopping centers still account for over half of retail sales in the U.S.  However, the shopping mall experience has changed a lot in the last 25 years.  Today, there are roughly 1,000 enclosed malls and approximately 400 upscale lifestyle centers. These lifestyle centers are often serving as a suburban downtown providing retail, entertainment and community.

Read More

Planes, Trains and Automobiles. I Pick Planes.

I just got back from visiting a subject property in Grand Rapids, Michigan.  Over 10+ hours, I drove a total of 600+ miles to go from FRG’s northeast Ohio office to the subject and back to our office.

CESSNA172If I would have flown, I could have left after breakfast and would have been back at the office in time for a lunch meeting.   It would have cost me about $285 more to rent a Cessna 172 and fly myself roundtrip to Grand Rapids. For me, flying – just makes good business sense.

There are 5,300 general aviation airports in the United States with 550 servicing commercial airline travel.  In Ohio, there are 104 public-owned, public use airports.  In northeast Ohio, Burke Lakefront airport is the country’s first downtown and first municipally owned and operated airport.  And even with dwindling air traffic it is still amongst the busiest airports in Ohio due to executive travel, professional sports team travel and flight school use.

Read More