Appraisal Adjustment Calculator
This tool helps you calculate the adjustment amount for a single difference between a Comparable Property and the Subject Property in a real estate appraisal's Sales Comparison Approach.
Enter the value of the specific difference and indicate whether the Subject or the Comparable property is superior with regard to this feature. The tool will output the resulting dollar adjustment to apply to the Comparable's sale price.
Calculate Single Adjustment
Understanding Appraisal Adjustments
What are Appraisal Adjustments?
In real estate appraisal, particularly in the Sales Comparison Approach, adjustments are made to the sale prices of comparable properties to account for differences between the comparable and the subject property. The goal is to estimate what the comparable property would have sold for *if* it were identical to the subject property on the date of sale.
Why Make Adjustments?
No two properties are exactly alike. Adjustments account for variations in features like size, condition, age, location, lot size, number of bedrooms/bathrooms, upgrades, etc. This process helps the appraiser arrive at a credible opinion of the subject property's market value.
Subject vs. Comparable: Who Gets Adjusted?
Adjustments are *always* made to the **Comparable Property's** sale price. The Subject Property is the benchmark and its characteristics remain constant. If the comparable is superior to the subject for a specific feature, the comparable's price is adjusted *downward* (subtracted). If the comparable is inferior to the subject, the comparable's price is adjusted *upward* (added).
Positive (+) vs. Negative (-) Adjustments
- If the **Subject** property is **Superior** to the Comparable for a feature (or the Comparable is inferior), you **Add** the value of the difference to the Comparable's price. The adjustment is **Positive (+)**.
- If the **Comparable** property is **Superior** to the Subject for a feature (or the Subject is inferior), you **Subtract** the value of the difference from the Comparable's price. The adjustment is **Negative (-)**.
Where Do Adjustment Values Come From?
The dollar value of an adjustment is derived from market data, often through techniques like paired sales analysis, cost analysis, or income analysis. This tool *applies* a value you provide; it does not determine the value of the difference itself.
Appraisal Adjustment Examples
Click on an example to see the step-by-step adjustment calculation:
Example 1: Extra Bedroom
Scenario: Comparable 1 has 4 bedrooms, Subject Property has 3 bedrooms. Market data indicates an extra bedroom is worth $10,000.
1. Value of Difference: $10,000.
2. Superior Property: Comparable Property (it has the extra bedroom).
3. Calculation: Since the Comparable is superior, you subtract the value of the difference from the Comparable's price.
4. Result: Adjustment = -$10,000.
Conclusion: Subtract $10,000 from Comparable 1's sale price for this difference.
Example 2: Inferior Bathroom Count
Scenario: Comparable 2 has 2 full bathrooms, Subject Property has 2.5 bathrooms. Market data indicates a half bathroom is worth $4,000.
1. Value of Difference: $4,000.
2. Superior Property: Subject Property (it has the extra half bath).
3. Calculation: Since the Subject is superior (meaning the Comparable is inferior), you add the value of the difference to the Comparable's price.
4. Result: Adjustment = +$4,000.
Conclusion: Add $4,000 to Comparable 2's sale price for this difference.
Example 3: Larger Living Area
Scenario: Comparable 3 has 200 sq ft more living area than the Subject. Market data supports an adjustment of $75 per sq ft for size differences. Total value of difference = 200 * $75 = $15,000.
1. Value of Difference: $15,000.
2. Superior Property: Comparable Property (it is larger).
3. Calculation: Since the Comparable is superior, subtract the value.
4. Result: Adjustment = -$15,000.
Conclusion: Subtract $15,000 from Comparable 3's sale price.
Example 4: Better Location (Minor)
Scenario: Comparable 4 is on a slightly busier street than the Subject. Market analysis suggests this location difference warrants a $2,500 adjustment.
1. Value of Difference: $2,500.
2. Superior Property: Subject Property (it has the quieter location, making the Comparable's location inferior).
3. Calculation: Since the Subject is superior, add the value to the Comparable's price.
4. Result: Adjustment = +$2,500.
Conclusion: Add $2,500 to Comparable 4's sale price.
Example 5: Recent Upgrade (Roof)
Scenario: The Subject Property recently had a new roof installed, while Comparable 5 has an older roof nearing the end of its life. The value attributed to the superior roof is estimated at $8,000.
1. Value of Difference: $8,000.
2. Superior Property: Subject Property (newer roof).
3. Calculation: Since the Subject is superior, add the value to the Comparable's price.
4. Result: Adjustment = +$8,000.
Conclusion: Add $8,000 to Comparable 5's sale price.
Example 6: Garage Space
Scenario: Comparable 6 has a 2-car garage, Subject Property has a 1-car garage. The market value of the extra garage space is $7,000.
1. Value of Difference: $7,000.
2. Superior Property: Comparable Property (larger garage).
3. Calculation: Since the Comparable is superior, subtract the value.
4. Result: Adjustment = -$7,000.
Conclusion: Subtract $7,000 from Comparable 6's sale price.
Example 7: Condition Difference (Minor)
Scenario: Comparable 7 is in slightly better condition overall than the Subject Property, warranting a $3,000 adjustment.
1. Value of Difference: $3,000.
2. Superior Property: Comparable Property (better condition).
3. Calculation: Since the Comparable is superior, subtract the value.
4. Result: Adjustment = -$3,000.
Conclusion: Subtract $3,000 from Comparable 7's sale price.
Example 8: Lot Size
Scenario: The Subject Property has a larger lot than Comparable 8, adding an estimated $6,000 in value.
1. Value of Difference: $6,000.
2. Superior Property: Subject Property (larger lot).
3. Calculation: Since the Subject is superior, add the value to the Comparable's price.
4. Result: Adjustment = +$6,000.
Conclusion: Add $6,000 to Comparable 8's sale price.
Example 9: View
Scenario: Comparable 9 has a desirable mountain view that the Subject Property lacks. This view is valued at $12,000.
1. Value of Difference: $12,000.
2. Superior Property: Comparable Property (has the view).
3. Calculation: Since the Comparable is superior, subtract the value.
4. Result: Adjustment = -$12,000.
Conclusion: Subtract $12,000 from Comparable 9's sale price.
Example 10: Age Difference
Scenario: The Subject Property was built 5 years after Comparable 10, giving it a slight age advantage valued at $3,500.
1. Value of Difference: $3,500.
2. Superior Property: Subject Property (newer).
3. Calculation: Since the Subject is superior, add the value to the Comparable's price.
4. Result: Adjustment = +$3,500.
Conclusion: Add $3,500 to Comparable 10's sale price.
Frequently Asked Questions about Appraisal Adjustments
1. What is an appraisal adjustment used for?
Appraisal adjustments are used in the Sales Comparison Approach to modify the sale price of comparable properties to reflect differences between them and the subject property, helping to estimate the subject's market value.
2. Do I adjust the Subject Property or the Comparable Property?
You always adjust the **Comparable Property's** sale price. The Subject Property serves as the basis for comparison.
3. When do I add (+) an adjustment?
You add value to the Comparable's price if the **Subject Property is superior** to the Comparable for the feature being adjusted (or if the Comparable is inferior to the Subject).
4. When do I subtract (-) an adjustment?
You subtract value from the Comparable's price if the **Comparable Property is superior** to the Subject for the feature being adjusted (or if the Subject is inferior to the Comparable).
5. Where does the dollar value of the adjustment come from?
The value of the adjustment is determined by the appraiser based on market data analysis (like paired sales) or other recognized valuation techniques. This tool requires you to input that determined value.
6. Can this tool calculate adjustments for multiple differences at once?
No, this specific tool is designed for calculating the adjustment for **one single difference** at a time. In a real appraisal, you would calculate and apply adjustments for multiple differences cumulatively.
7. What kinds of property features are typically adjusted?
Commonly adjusted features include number of bedrooms/bathrooms, gross living area (square footage), lot size, age, condition, quality of construction, location factors, views, and specific amenities (like a pool or garage).
8. What happens if I enter a value of 0 for the adjustment?
If the "Value of Adjustment Item" is 0, the calculated adjustment will also be $0, regardless of which property is selected as superior. This makes sense, as there is no value difference to adjust for.
9. Is this the only step in the Sales Comparison Approach?
No, calculating individual adjustments is just one step. Appraisers identify comparable sales, analyze contracts and sales data, determine the appropriate adjustments for various factors, apply those adjustments to get adjusted sale prices for each comparable, and finally reconcile the adjusted prices to arrive at a value opinion for the subject property.
10. What if the Comparable has a feature the Subject doesn't have (e.g., a pool)?
If the Comparable has a feature the Subject lacks, the Comparable is superior for that feature. You would enter the market value of that feature as the "Value of Adjustment Item" and select "Comparable Property" as Superior. The tool will calculate a negative adjustment (subtracting the value from the Comparable's price).
