Sales Comparison Adjustments: Four Comps and a Single Point Value
The subject is a 2,100-sf, three-bedroom/two-bath ranch with a two-car garage, average condition, and a 0.25-acre lot. The effective date is June 1. Four closed sales are available. Comp 1: $312,000, 8 months before the effective date, 2,000 sf, two-car garage, good condition, 0.22 acre. Comp 2: $335,000, 3 months before, 2,250 sf, two-car, average, 0.28 acre. Comp 3: $298,000, 6 months before, 1,950 sf, one-car, average, 0.24 acre. Comp 4: $342,000, 1 month before, 2,300 sf, three-car, good, 0.30 acre. Market evidence supports 0.5% per month for time, $65/sf for GLA, $12,000 per garage stall, and $15,000 for good versus average condition. No supportable lot adjustment exists; the appraiser decides not to adjust for lot size but to discuss it. The contract price is not used. The client wants a single point value, not a range.
1. Compute the adjusted sale price for each comparable and reconcile a value conclusion. Show all adjustments and explain the weighting.
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Adjustments are made to the comparables to make them equivalent to the subject.
Comp 1: time +4.0% = +$12,480; GLA +100 sf x $65 = +$6,500; condition good to average = -$15,000. Adjusted: $312,000 + $12,480 + $6,500 - $15,000 = $315,980. Gross adjustment = $33,980, or 10.9%.
Comp 2: time +1.5% = +$5,025; GLA -150 sf x $65 = -$9,750; garage and condition = $0. Adjusted: $335,000 + $5,025 - $9,750 = $330,275. Gross adjustment = $14,775, or 4.4%.
Comp 3: time +3.0% = +$8,940; GLA +150 sf x $65 = +$9,750; one-car to two-car = +$12,000. Adjusted: $298,000 + $8,940 + $9,750 + $12,000 = $328,690. Gross adjustment = $30,690, or 10.3%.
Comp 4: time +0.5% = +$1,710; GLA -200 sf x $65 = -$13,000; three-car to two-car = -$12,000; condition good to average = -$15,000. Adjusted: $342,000 + $1,710 - $13,000 - $12,000 - $15,000 = $303,710. Gross adjustment = $41,710, or 12.2%.
The adjusted range is $303,710 to $330,275. Comp 2 has the smallest gross adjustment and is most similar in size and condition, so it should receive the greatest weight. Comp 3 is also similar and supports the upper part of the range. Comp 1 requires a large time adjustment, and Comp 4 requires large garage and condition adjustments and produces the lowest adjusted value. A reconciled value of about $327,000 is supported, with emphasis on Comps 2 and 3.
2. What if the lot-size differences are actually significant? How would that affect reliability, and what additional analysis would you perform?
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If lot size materially affects buyer behavior, the no-adjustment decision understates the reliability of the grid. The adjusted values would no longer be directly comparable, and the reconciliation should be tempered or the grid revised. The appraiser should not invent a lot adjustment without support. Additional analysis could include paired sales of otherwise similar homes with different lot sizes, a regression of sale price on lot size while controlling for GLA and condition, or a sensitivity range showing the effect of plausible lot adjustments.
The appraiser should also test whether lot size is a proxy for other differences, such as location or garage configuration. If the analysis produces a reliable adjustment, apply it and recompute the adjusted values and gross adjustment percentages. If it does not, disclose the limitation and use qualitative analysis, weighting the comparables with the most similar lots. The single point value should reflect the remaining uncertainty, and the report should explain why a range was not used despite the client's request.