Adjusting for Value Differences Francois K. Gregoire, IFA, RAA State Certified Residential Appraiser #0000142
PREPARED FOR:
about Frank………... <ul><li>Licensed since 1976 </li></ul><ul><li>Realtor® since 1977 </li></ul><ul><li>Appraising since 197...
about Frank………... <ul><li>Real Estate License Law and Appraisal Instructor since 1977 </li></ul><ul><li>Member Florida Rea...
CHANGE PANIC !!
TODAY <ul><li>Sales Comparison Approach to Value </li></ul><ul><li>Underlying Principle </li></ul><ul><li>Selection of Com...
NOT PROVIDED TODAY The &quot;LIST&quot;
SALES COMPARISON APPROACH <ul><li>Value or Price derived by comparison of SALES and/or LISTINGS to SUBJECT PROPERTY </li><...
UNDERLYING PRINCIPLE <ul><li>SUBSTITUTION </li></ul><ul><li>The value of a property tends to be set by the price that woul...
SELECTION OF COMPARABLE SALES AND LISTINGS <ul><li>Worthy of Comparison </li></ul><ul><li>Competitive with Subject </li></...
UNITS OF COMPARISON <ul><li>Unit selected depends upon the nature of the property </li></ul><ul><li>When UNITS OF COMPARIS...
SALES PRICE PER SQUARE FOOT OF LIVING AREA
ELEMENTS OF COMPARISON <ul><li>Characteristics of Properties-Transactions that cause Prices Paid to Vary </li></ul><ul><li...
ELEMENTS OF COMPARISON <ul><li>Characteristics of Properties-Transactions that cause Prices Paid to Vary </li></ul><ul><li...
ADJUSTMENT TECHNIQUE <ul><li>Adjustments made to Comparable </li></ul><ul><li>Make the Comparable equal to Subject </li></...
HOW MUCH TO ADJUST? Methods <ul><li>Paired Sales </li></ul><ul><li>Cost Analysis </li></ul><ul><li>Capitalization of Rent ...
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 D...
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/...
COST ANALYSIS <ul><li>Cost to Cure </li></ul><ul><ul><li>Painting </li></ul></ul><ul><ul><li>Flooring </li></ul></ul><ul><...
DEPRECIATED COST = = X X $ 6,500 INDICATED VALUE OF ONE GARAGE SPACE $ 6,552 DEPRECIATED COST -$ 3,685 36% 25/70 LESS DEPR...
Capitalization of Rent GRM = 137 Develop Gross Rent Multiplier 137.84 = $1,850 ∕ $255,000 2 136.22 = $1,850 ∕ $252,000 1 G...
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/...
VALUE OF POOL $17,125 = 137 X $125 VALUE = GRM X MARKET RENT
RESULTS <ul><li>Garage </li></ul><ul><ul><li>$5,000, $6,500 </li></ul></ul><ul><li>Pool </li></ul><ul><ul><li>$15,500, $17...
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...
VALUE?  SUGGESTED LIST PRICE? ?????????
Francois K. Gregoire, IFA RAA State-Certified Residential Appraiser #0000142 Gregoire & Gregoire, Inc Realtor - Appraiser ...
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Value Adjustments Wpbor

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

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Value Adjustments Wpbor

  1. 1. Adjusting for Value Differences Francois K. Gregoire, IFA, RAA State Certified Residential Appraiser #0000142
  2. 2. PREPARED FOR:
  3. 3. about Frank………... <ul><li>Licensed since 1976 </li></ul><ul><li>Realtor® since 1977 </li></ul><ul><li>Appraising since 1977 </li></ul><ul><li>State-Certified Residential Appraiser since 1989 </li></ul>
  4. 4. about Frank………... <ul><li>Real Estate License Law and Appraisal Instructor since 1977 </li></ul><ul><li>Member Florida Real Estate Appraisal Board February, 2000 – February, 2008 </li></ul><ul><li>Qualified Expert Witness - Pinellas County Circuit Court, United States Bankruptcy Court </li></ul><ul><li>Expert Witness – Department of Business and Professional Regulation </li></ul>
  5. 5. CHANGE PANIC !!
  6. 6. TODAY <ul><li>Sales Comparison Approach to Value </li></ul><ul><li>Underlying Principle </li></ul><ul><li>Selection of Comparable Sales and Listings </li></ul><ul><li>Units of Comparison </li></ul><ul><li>Elements of Comparison </li></ul><ul><li>Adjustment Technique </li></ul><ul><li>Amount of Adjustment </li></ul>
  7. 7. NOT PROVIDED TODAY The &quot;LIST&quot;
  8. 8. SALES COMPARISON APPROACH <ul><li>Value or Price derived by comparison of SALES and/or LISTINGS to SUBJECT PROPERTY </li></ul><ul><li>Assumes Value or Price is directly related to prices of similar, competitive properties </li></ul><ul><li>Focus is on similarities and differences among properties that affect value or price </li></ul>
  9. 9. UNDERLYING PRINCIPLE <ul><li>SUBSTITUTION </li></ul><ul><li>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 </li></ul>
  10. 10. SELECTION OF COMPARABLE SALES AND LISTINGS <ul><li>Worthy of Comparison </li></ul><ul><li>Competitive with Subject </li></ul><ul><li>Same Highest and Best use </li></ul><ul><li>Similar to Subject in date of sale, location, size, design, construction, age, condition, physical characteristics </li></ul>
  11. 11. UNITS OF COMPARISON <ul><li>Unit selected depends upon the nature of the property </li></ul><ul><li>When UNITS OF COMPARISON are appropriate and property applied, usually no need to adjust for size </li></ul>
  12. 12. SALES PRICE PER SQUARE FOOT OF LIVING AREA
  13. 13. ELEMENTS OF COMPARISON <ul><li>Characteristics of Properties-Transactions that cause Prices Paid to Vary </li></ul><ul><li>Financing Terms </li></ul><ul><li>Conditions of Sale </li></ul><ul><li>Market Conditions </li></ul><ul><li>Location </li></ul>
  14. 14. ELEMENTS OF COMPARISON <ul><li>Characteristics of Properties-Transactions that cause Prices Paid to Vary </li></ul><ul><li>Physical Characteristics </li></ul><ul><ul><li>Size </li></ul></ul><ul><ul><li>Construction Quality </li></ul></ul><ul><ul><li>Condition </li></ul></ul><ul><ul><li>Amenities and Extras </li></ul></ul>
  15. 15. ADJUSTMENT TECHNIQUE <ul><li>Adjustments made to Comparable </li></ul><ul><li>Make the Comparable equal to Subject </li></ul><ul><li>Difference-Significant enough to Affect Market Behavior </li></ul><ul><li>Measurable </li></ul><ul><li>Superior Feature – Negative Adjustment </li></ul><ul><li>Inferior Feature – Positive Adjustment </li></ul>
  16. 16. HOW MUCH TO ADJUST? Methods <ul><li>Paired Sales </li></ul><ul><li>Cost Analysis </li></ul><ul><li>Capitalization of Rent Differences </li></ul>
  17. 17. 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
  18. 18. 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
  19. 19. COST ANALYSIS <ul><li>Cost to Cure </li></ul><ul><ul><li>Painting </li></ul></ul><ul><ul><li>Flooring </li></ul></ul><ul><ul><li>Repairs </li></ul></ul><ul><li>Depreciated Cost </li></ul><ul><ul><li>Amenities and Extras </li></ul></ul>
  20. 20. 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
  21. 21. 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 #
  22. 22. 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
  23. 23. VALUE OF POOL $17,125 = 137 X $125 VALUE = GRM X MARKET RENT
  24. 24. RESULTS <ul><li>Garage </li></ul><ul><ul><li>$5,000, $6,500 </li></ul></ul><ul><li>Pool </li></ul><ul><ul><li>$15,500, $17,125, $17,500 </li></ul></ul>
  25. 25. 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
  26. 26. VALUE? SUGGESTED LIST PRICE? ?????????
  27. 27. Francois K. Gregoire, IFA RAA State-Certified Residential Appraiser #0000142 Gregoire & Gregoire, Inc Realtor - Appraiser 727-344-3393 [email_address]

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