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Recent PostsBlogroll« The Fair Value and Independent Appraisal Act | Home | Weak rules cripple appraiser oversight » Making time adjustments in declining markets.By admin | June 7, 2008 Dear Readers: This is a comment submitted from an appraiser in our national approved panel. Please feel free to comment and discuss. AppraiserLoft.com Team _____ We all understand that declining markets are a major concern to the general community. What is the best formula for the appraiser to make a time adjustment in the market? This is how our firm handles the issue. If anyone has a better formula, please share. We compile all sales from a specific market area for the last 12 months and total the sales prices, then compile the previous 12 months. We then find the difference in total values from this time frame as a percentage. This is the average drop in price between the two years. Now, utilizing any particular applied sale, multiply the sales price by this figure and divide by 12 months. This is the depreciated amount occurring per month, based on the historic trend in that market area. To apply the time adjustment, we multiply this figure times the amount of months that have occurred from the appraisal inspection date, back to the date of comparables sale contract. The sale contract date best represents price to be paid at the time of sale.
The questions I have is, how general or detailed should the data be? Full county area? School district? Immediate neighborhood? Just 2-stories? What about the time frame. Should it be twelve month? Maybe six? And, how MUCH data would be considered relevant?
This story is discussed in our office on a daily basis…
Eric Dean Morse, RAA Topics: Appraiser's Voice | 1 Comment » One Response to “Making time adjustments in declining markets.”CommentsYou must be logged in to post a comment. |
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June 7th, 2008 at 11:23 am
[...] Winding Road wrote an interesting post today onHere’s a quick excerpt Dear Readers: This is a comment submitted from an appraiser in our national approved panel. Please feel free to comment and discuss. AppraiserLoft.com Team ______________________________________________________________________ We all understand that declining markets are a major concern to the general community. What is the best formula for the appraiser to make a time adjustment in the market? This is how our firm handles the issue. If anyone has a better formula, please share. We compil [...]