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Explaining Adjustments to Homeowners

by Administrator on Jan 5, 2017 Homes 1470 Views

Appraisers understand how they go about making adjustments to comparable sales for important differences that they have with a subject property.  They know that when you are adjusting a comparable you pay attention to things like; quality of construction, condition, date of sale, financing, concessions, site size, site amenities, gross living area, bedrooms, baths, basement, garages, porches, patios, pool, flooring and remodeling.  These are some of the obvious factors that may be adjusted for but there are other things like; casitas, gated access, views, community benefits, golf course use, homeowner association fees and SID / LID balances.

Appraisal forms generally offer a standard set of adjustment factors but the list is a limited and at times it must be expanded on just to include all of the important differences.  Homeowners ask me why the Koi Pond or the BBQ wasn't adjusted for.  When you are analyzing a million-dollar home how much weight do you think a buyer gives to a BBQ grill?  Many buyers will gloss over the pool heater, the pool waterfall, the larger lot and even some magnificent landscaping.  So, I generally don't get too excited about adjusting for the BBQ.

When a homeowner with multiple appraisal reports starts making comparisons he will, in my experience, ask why one appraiser gave weight to its inclusion within a gated community while another gave weight to the adjustments made for differences in site size and no weight to it being in a gated community.  The subjective choices appraisers make become obvious when you start comparing one report to another.  You don't need to be a homeowner to have you head spin when you compare appraisals.  It's not rocket science and any appraiser who says it is you should keep your eye on.

Appraisers have access to programs that perform statistical paired sales analyses.  So, within an area or a subdivision they can look at what for example is being paid for an inground swimming pool or an additional garage.  The adjustment figures offer appraisers an indication of the value attributable to feature or factor differences.  Since there are usually a number of differences between any comparable and a subject property there are usually few if any comparable with one or no adjustments required.  It happens, appraisers do at times find "model matched" homes that have the same layout, the same exterior / interior quality, the same builder, they were built in the same year and often you look at the photos and think you are in the same home!  Finding model matched homes is not as rare as you would imagine in Las Vegas where many builders did “cookie cutter” subdivisions with several homes having the same layout.

Explaining the fact that home buyers often don't think about what improvements cost is not easy for homeowners.  They like to tell you "well I paid X dollars for that, it's an upgrade!  I may not dispute the fact that the Koi pond cost you $ 60,000 to complete and you have the receipts to prove it, I'm just not going to tell you that you are likely to recoup that money in my appraisal if I don't believe it's true. There are some upgrade items that buyers may not see as adding all that much value to your home.

There are differences that some owners don't think about that appraisers and buyers do, like a property being in a guard-gated community versus it being in just a gated community.  Guard-gated communities control access much better than a secret code that everyone gives out in a gated community.  An appraiser has an appreciation for the difference having to access neighborhoods with both.

Subdivisions can also vary considerably in the amenities that they offer.  Two may be gated but one may offer free golf course access.  It may have pools, a fitness center, parks and pools while the other subdivision has none of these features.   Looking at a sale called "comparable" by an appraiser you have to assume that some adjustment was made for subdivision amenities yet I have seen some that make no mention of differences.

Appraisers usually do a good job of reporting the homeowner’s association (HOA) fees that the owner of the subject property must pay, but I have seen few discuss the fact that the fees are at times out of line with what is received.  A luxury home in a guard-gated community may have a $ 700 per month fee but a similar home may have an HOA fee that is half that.  Is it worth $ 350 per month to have the prestige of having your home in the more expensive HOA?  If the amenities are similar I would tend to question whether the difference is real or imagined. 

When an owner asks you the appraiser to justify your adjustments it shouldn't be difficult, it's not rocket science, and yes, many adjustments are made without a paired sales analysis to back them up.  It's my experience that many appraisers have no basis for their adjustments and they don't expect to have to defend them.  It just depends on who the work is being done for.  A bank may want to see that you have a basis for your adjustments while an individual or an attorney may not care to see it.

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (, or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at

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