Understanding Adjustments In An Appraisal Report.

One of the hurdles in understanding the appraisal. Is what are adjustments? How do appraisers develop and apply adjustments?

Adjustments are a $ or % amount, that the appraiser extracts from the market. Through either statistical analysis of like properties to the subject (the house being appraised). Or what is called "matched pair analysis." Which is a method of looking at properties that are similar. Not necessarily exactly similar to the subject. But, looking at two properties in the same neighborhood. One has a two car garage, 1500 sf and sold for $150,000. The second one had a one car garage, 1500 sf and sold for $145,000. The appraiser can extrapolate that the market recognizes the difference between a one car and a two car garage at $5000. So, The subject property has a one car garage. and the comparable has a two car garage. The appraiser would subtract -$5000 from the comparable. Making it now equivalent to a one car garage property. Adjustment are made, 1. if the market provides sufficient data for the appraiser to analyze. Determine if the market realizes the difference between a items of difference. Like a chain link fence and a privacy fence, garage, patios, screen porch, swimming pools... etc. If the market does not provide the appraiser with sufficient data to analyze. Then there may not be sufficient data to support the appraiser making an adjustment to a comparable for a difference from the subject. But, the appraiser cannot make up adjustments or "feel" like an adjustment is warranted. There MUST be sufficient market data to support adjustments.

Hope this helps.