percentage adjustment

Appraisers adjust for property differences using lump-sum dollar amounts, percentage, or unit adjustments. Percentage adjustments are based on a percentage of the sales price of the comparable property. They are helpful in residential appraising when attempting to apply uniform adjustments for broad market preferences, market changes (date of sale adjustments), and for differences in the actual ages of improvements. Typically, percentage adjustments are more common in non-residential appraising.

For example: a neighborhood has a superior amenity package and similar houses in a nearby subdivision sell for 10% less. Since the market values one location over another by 10%, then the appraiser should use the percentage adjustment and adjust any comparables accordingly.

It should be noted that there is an order for making percentage adjustments. Since the percentages are applied to the sales price of the comparable, it is necessary to first adjust the comparable’s sales price for the term and conditions of the sale, then the date of sale, and finally the locational and physical factors.

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