Episode 070 - Is It Time for a Time Adjustment?
Using dated sales is one of the best indicators of value in many cases. The problem occurs when those sales are dated and/or the markets have changed (increased or decreased) since those sales.
In this episode, B talks about when to consider a time adjustment and how you can go about estimating a legitimate and reasonable percentage of change.
SHOW NOTES
- 01:56 – How can values increase if appraisers use dated sales?
- 03:15 – Time adjustments make up the gap between dated sales and current markets.
- 03:37 – Are time adjustments being recognized? Not just in current markets, but future markets. Are they being analyzed and are time adjustments being applied?
- 04:30 – Dated sales help comply with underwriting requirements. Unique properties that a lender might require.
- 06:27 – Pay attention to supply and demand. When homes sell “slow”, is the market stable?
- 07:50 – Recognize the possibility of the increasing, decreasing, or stable market.
- 08:14 – Analyze the change in the market. How much has it changed?
- 09:55 – Look at your MLS to see if they have the ability to provide a system that will help analyze market trends specific to the area around the property you are valuing.
- 10:25 – Search for a group of comparable properties from the specific market. Put it into a spreadsheet. An extremely easy regression analysis.
- 12:10 – Apply the time adjustment. Take annual appreciation, divide by 12 to come up with a monthly change. Multiply that monthly amount by the number of months from today’s date to come up with the percent change.
- 13:28 – Should you apply the time adjustment to the contract date or sale date? Huge debate on which date to use.
- 14:15 – Multiple offers can assist in justifying a market increase.
SHOW LINKS
BETWEEN THE LINES LINKS
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