Ch 3 Flashcards
An appraisal is based on two primary types of analysis:
Quantitative analysis is based on numbers and results in either dollar or percentage amounts. Qualitative analysis is used for elements that cannot be given a numerical value.
Quantitative adjustment techniques include:
• Paired data analysis • Graphic analysis • Trend analysis • Statistical analysis • Cost analysis • Capitalization of rent differences
Qualitative analysis techniques include:
• Relative comparison analysis • Ranking analysis • Personal interviews
Comparable 1 sells for $208,000 and contains 2,100 square feet. Comparable 2 is similar in all aspects, except it contains 1,950 square feet and it sells for $203,500. If our subject property contains 2,200 square feet and Comparable 1 has 2,100 square feet, how much would be the adjustment?
Comparable 1 sells for $208,000 and contains 2,100 square feet. Comparable 2 is similar in all aspects, except it contains 1,950 square feet and it sells for $203,500. 2,100 - 1,950 = 150 square feet. This is the difference in the GLA between the two properties. $208,000 - $203,500 = $4,500. This is the difference in the sale price between the two properties. Now we take the difference in the sale price and divide it by the difference in the GLA. $4,500 ÷ 150 = $30 per SF From this example, we can extract the information that in this instance, the market derived rate was $30 per square foot for an extra 150 square feet. Then we can take that data and apply it when we make adjustments for differences in size between the subject and the comparable sales. If our subject property contains 2,200 square feet and Comparable 1 has 2,100 square feet, it would warrant an adjustment of $30 x 100 or $3,000.
A home sells in January for $180,000 and sells again in November for $189,000. When the home resold it had not been improved at all. The only change was the time. What is the indicated adjustment for time or change in market conditions? If a comparable property sold 6 months ago, we could adjust it on the basis of x% per month or a total of x%
$189,000 ÷ $180,000 = 1.05 That is an increase of 5.0% over 10 months, or an average of .5% per month. If a comparable property sold 6 months ago, we could adjust it on the basis of .5% per month or a total of 3%
Sale A, a 1,600 square-foot house with a double garage sold for $190,000 in February. Sale B, which is very similar except it had 1,700 square feet of living area and only a single garage, sold for $204,900 in October. It has already been determined that the indicated adjustment for square feet of living area is $38.00 per square foot and the adjustment for the difference in garages should be $4,000. How much is the market conditions (i.e., time) adjustment in %?
1,700 SF - 1,600 SF = 100 SF 100 SF x $38 = $3,800 size adjustment Sale price of Sale B: $204,900 Adjustment for size - $3,800 Adjustment for garage + $4,000 Adjusted price of Sale B: $205,100 Earlier sale (Sale A): $190,000 Difference (time of sale) $15,100 $15,100 ÷ $190,000 = .079 or 7.9% increase
Divide in the last step by $190,000. The unadjusted sale amount. Not the adjusted
A two-unit property without air conditioning rents for $1,000 per month for each unit. Another similar two-unit property rents for $1,050 per month per unit because it has central air conditioning. If the gross rent multiplier (GRM) is 80, what is the adjustment amount?
2 units X $50 per month = $100 per month rent increase. $100 per month x 80 GRM = $8,000 value difference. The indicated adjustment for central air conditioning for this two-unit property is $8,000.
Which two comparables can be paired to extract a size adjustment?
Sales 1 and 3 are the same except for size
What is the per-square-foot value for the size adjustment?
$180,000 - $170,000 = $10,000
1,700 SF - 1,500 SF = 200 SF
$10,000 divided by 200 SF = $50.00 per SF
What type of adjustment should be made to comparables 1 and 3 for the fireplace?
Because Comparables 1 and 3 are superior to the subject, the adjustment would be Negative
Which two comparables can be used to determine the adjustment for age?
Sales 2 and 4 are the same except for age
The yearly adjustment for age should be:
$178,000 - $174,000 = $4,000. $4,000 / 2 years = $2,000
A comparable property sold 3 months ago for $125,000. The market shows appropriate adjustments to be:
Time adjustment +$3,500
Location adjustment +$5,000
Quality adjustment -$10,000
- What is the indicated net adjustment to the comparable property?
-$1,500
3,500 plus 5,000 minus 10,000
A comparable property sold 3 months ago for $125,000. The market shows appropriate adjustments to be:
Time adjustment +$3,500
Location adjustment +$5,000
Quality adjustment -$10,000
What is the amount of total gross adjustments?
$18,500
3,500 plus 5,000 plus 10,000
A comparable property sold 3 months ago for $125,000. The market shows appropriate adjustments to be:
Time adjustment +$3,500
Location adjustment +$5,000
Quality adjustment -$10,000
What is the adjusted sales price of the comparable?
$123,500
125,000 plus 3,500 plus 5,000 minus 10,000
