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Value Adjustments Wpbor

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Presentation to demonstrate several methods of extracting value adjustments from market data

Presentation to demonstrate several methods of extracting value adjustments from market data

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Value Adjustments Wpbor Value Adjustments Wpbor Presentation Transcript

  • Adjusting for Value Differences Francois K. Gregoire, IFA, RAA State Certified Residential Appraiser #0000142
  • PREPARED FOR:
  • about Frank………...
    • Licensed since 1976
    • Realtor® since 1977
    • Appraising since 1977
    • State-Certified Residential Appraiser since 1989
  • about Frank………...
    • Real Estate License Law and Appraisal Instructor since 1977
    • Member Florida Real Estate Appraisal Board February, 2000 – February, 2008
    • Qualified Expert Witness - Pinellas County Circuit Court, United States Bankruptcy Court
    • Expert Witness – Department of Business and Professional Regulation
  • CHANGE PANIC !!
  • TODAY
    • Sales Comparison Approach to Value
    • Underlying Principle
    • Selection of Comparable Sales and Listings
    • Units of Comparison
    • Elements of Comparison
    • Adjustment Technique
    • Amount of Adjustment
  • NOT PROVIDED TODAY The "LIST"
  • SALES COMPARISON APPROACH
    • Value or Price derived by comparison of SALES and/or LISTINGS to SUBJECT PROPERTY
    • Assumes Value or Price is directly related to prices of similar, competitive properties
    • Focus is on similarities and differences among properties that affect value or price
  • UNDERLYING PRINCIPLE
    • SUBSTITUTION
    • The value of a property tends to be set by the price that would be paid to acquire a substitute property of similar utility and desirability within a reasonable amount of time
  • SELECTION OF COMPARABLE SALES AND LISTINGS
    • Worthy of Comparison
    • Competitive with Subject
    • Same Highest and Best use
    • Similar to Subject in date of sale, location, size, design, construction, age, condition, physical characteristics
  • UNITS OF COMPARISON
    • Unit selected depends upon the nature of the property
    • When UNITS OF COMPARISON are appropriate and property applied, usually no need to adjust for size
  • SALES PRICE PER SQUARE FOOT OF LIVING AREA
  • ELEMENTS OF COMPARISON
    • Characteristics of Properties-Transactions that cause Prices Paid to Vary
    • Financing Terms
    • Conditions of Sale
    • Market Conditions
    • Location
  • ELEMENTS OF COMPARISON
    • Characteristics of Properties-Transactions that cause Prices Paid to Vary
    • Physical Characteristics
      • Size
      • Construction Quality
      • Condition
      • Amenities and Extras
  • ADJUSTMENT TECHNIQUE
    • Adjustments made to Comparable
    • Make the Comparable equal to Subject
    • Difference-Significant enough to Affect Market Behavior
    • Measurable
    • Superior Feature – Negative Adjustment
    • Inferior Feature – Positive Adjustment
  • HOW MUCH TO ADJUST? Methods
    • Paired Sales
    • Cost Analysis
    • Capitalization of Rent Differences
  • PAIRED SALES GARAGE 1590 1600 1550 SIZE 4/2 4/2 3/2 BR/BATH ? GARAGE VALUE 2 Car 1 Car 2 Car GARAGE 4/2008 4/2008 2/2008 DATE OF SALE $266,000 $260,000 $265,000 SALES PRICE SALE #3 SALE #2 SALE #1
  • PAIRED SALES POOL 1590 1600 1550 SIZE 4/2 4/2 3/2 BR/BATH ? ? POOL VALUE Above Ground None In Ground POOL 4/2008 5/2008 3/2008 DATE OF SALE $262,000 $260,000 $277,500 SALES PRICE SALE #6 SALE #5 SALE #4
  • COST ANALYSIS
    • Cost to Cure
      • Painting
      • Flooring
      • Repairs
    • Depreciated Cost
      • Amenities and Extras
  • DEPRECIATED COST = = X X $ 6,500 INDICATED VALUE OF ONE GARAGE SPACE $ 6,552 DEPRECIATED COST -$ 3,685 36% 25/70 LESS DEPRECIATION EFF.AGE/LIFE $10,237 $31.50 325 GARAGE COST NEW COST/SF SIZE
  • Capitalization of Rent GRM = 137 Develop Gross Rent Multiplier 137.84 = $1,850 ∕ $255,000 2 136.22 = $1,850 ∕ $252,000 1 GRM = Actual Rent ∕ Sales Price Sale #
  • MARKET RENT 1590 1600 1550 SIZE 4/2 4/2 3/2 BR/BATH ? RENT VALUE OF POOL Above Ground None In Ground POOL 4/2008 5/2008 3/2008 LEASE DATE $1800 $1800 $1925 ACTUAL RENT RENTAL #3 RENTAL #2 RENTAL #1
  • VALUE OF POOL $17,125 = 137 X $125 VALUE = GRM X MARKET RENT
  • RESULTS
    • Garage
      • $5,000, $6,500
    • Pool
      • $15,500, $17,125, $17,500
  • COMPARISON GRID + 6,000 1 CAR + 6,000 1 CAR 2 CAR GARAGE 3/2 4/2 3/2 BR/BA $283,500 $283,000 ADJUSTED PRICE INGRND +17,000 NONE INGRND POOL 3/2008 4/2008 6/2008 DATE $277,500 $260,000 SALES PRICE ADJUST COMP #4 ADJUST COMP #1 SUBJECT
  • VALUE? SUGGESTED LIST PRICE? ?????????
  • Francois K. Gregoire, IFA RAA State-Certified Residential Appraiser #0000142 Gregoire & Gregoire, Inc Realtor - Appraiser 727-344-3393 [email_address]