Episode 060 - Appraisal Bracketology
Just like any good March Madness fan, appraisal bracketing can make or break you. Setting lower and upper limits on homes, elements, and adjustments can help you to better support your opinion of value.
Valuing of property is tough. Learning the technique of bracketing can help make the complicated task of valuation a little easier. Stick with this concepts and you will feel more comfortable with your CMAs. Oh...and GO HOOSIERS!!
SHOW NOTES
- 00:40 – What is bracketology?
- 01:15 – B is an IU Hoosiers fan!
- 02:09 – What is bracketing? Hard to find comparables with every element that is the same as the subject property. Instead, find two comparables where one is “better” and the other is “worse”.
- 02:55 – Square footage example. Subject is 1,500 square feet. Find comparables that bracket that element: one is 1,650 and one is 1,350 so one is bigger, and one is smaller.
- 04:03 – What can you learn from bracketing? Helps show marketability for the elements. Better shows that an element is “normal” for an area. If all comparables are bigger than the subject, that is an indication that the subject is under improved and is an issue. It can go the other way with all comparables are smaller, the subject might be over improved.
- 05:25 – Bracketing helps set the range. Focus on bracketing the home. Find homes that are better overall (sets a price ceiling) and worse overall (sets a price floor).
- 06:56 – Bracketing helps with adjustments. Lower price properties should adjust up, and higher priced properties should adjust down.
- 08:27 – Ideally, bracketing helps the adjustment process to get the comparables to “meet in the middle” and better support your value opinion with a tighter adjusted value range.
- 08:40 – Do not use all better comparables and adjust down, or all worse comparables and adjust up.
- 09:40 – More to this process but understanding the basics of bracketing can help you support your opinion and come up with better adjustment numbers.
- 10:04 – Bracketing is not science, but when you use it will, bracketing will help show you know what you are doing.
SHOW LINKS
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