Ask Henry

Vinyl vs. Brick Veneer
Hi Henry,
The subject is vinyl and a comp is brick veneer. Should an adjustment be made?


Dear Susan,
Most adjustments, including the one that you are asking about, depend upon how buyers in the market area of the subject property react to the difference between the subject property and the comparable sale. In some market areas there may be little difference in value between these two types of siding materials. In the market area where I live, brick veneer is more desirable than vinyl. Therefore, it would be necessary to make a downward adjustment to the comparable sale with brick veneer siding to reflect this difference.


Ask Henry

Adjustments for REOs and Short Sales

Hi H2:
Still a fan of your column/blog after all these years!

My question is: how do we adjust for bank sales and short sales when the only comparables available are in these two categories? In the past, we were able to find similar comps that were not REOs or short sales -- but that has now become impossible in some areas where I practice.

Larry Kowitt
Real Estate Appraiser, New Jersey

Dear Larry,

This depends upon what is happening in the subject property's market area for houses similar to the subject property. If the market area is flooded with short sales and bank sales, a prudent buyer is not going to buy the subject house unless it is priced competitively with those sales. Therefore, you should be using bank sales (REOs) and short sales as comparables and an adjustment may not be needed. It is more complicated when bank sales and short sales make up only a portion of the market. A prudent buyer would try to buy an REO or short sale if they were available on the effective date of the appraisal. Therefore, you would have to consider competitive listings. Ask yourself this question: "If the subject property were not available for sale on the effective date of the appraisal, what would a potential buyer of that property accept from what is available?" What they would buy as a substitute basically defines the comparables, and determines the value of the subject property.


Ask Henry

Average in an Opinion of Value

Dear H2,

On a current appraisal, after all adjustments are made in the sales comparison grid of the URAR, the end adjusted values are as follows: Comp1: $125,000 - Comp 2: $127,000 - Comp 3: $124,000. I am unable to accord weight to any one of the comparables and would like to give weight to all of them, using an average that is in the middle of the indicated value range ($124,000-$127,000). I would like to add all three indicated values, and divide by three (= $125,333 average) and then reconcile the values to be $125,000.

However, I’ve been told many times not to derive an opinion of value using a mathematical method such as this one. Yet I have seen a few appraisals of my peers that do use this method, where appropriate. Of course, I want to be in compliance with Fannie/Freddie and USPAP. What's your opinion?


Dear Brooke,

If you are using a URAR form, the format calls for you to describe each comparable sale and then adjust it for any significant differences between it and the subject property. However, there is nothing in the USPAP that requires you to analyze comparables this way. In more complex appraisals (usually reported in a narrative appraisal report format), I have seen large sets of comparable data adjusted using averages. What you plan to do is fine, but the final value estimate of the subject should be based upon a reconciliation that, in your judgment considers everything about the subject, market and comparables that you think is significant.

The reason an "average" is not usually used by appraisers in the reconciliation process is that it is a statistical term that implies that you took a random sample of all the available comparable sales, and that the sample was large enough (usually a minimum random sample is at least 18 items). You would then also need to state if the average you obtained is the mean, median or mode.


Ask Henry

Time Adjustments

Dear Henry,

I am seeing appraisers applying time adjustments in a wide variety of ways. It would be good if everyone were on the same page!

The Fannie Mae guideline on time adjustments says that if the sale is over 3 months old, you should apply a time adjustment. Does this mean that if the sale is under 3 months old, no time adjustment is required, even though the market is declining? Should the time adjustment be from the date of contract to the subject appraisal date, or to 3 months prior to the subject appraisal date? I have been unable to find an answer to this question anywhere. I am making time adjustments on all comparables up to the effective date of the subject appraisal, but don't know if I am being overly conservative. Thank you in advance for your help.

Toni Stiffler

Dear Toni,

The Fannie Mae guidelines (which Fannie Mae points out are just guidelines, and not mandatory requirements) suggest that a time adjustment is desirable for comparable sales that are over 3 months old. When you don't comply with a Fannie Mae guideline, I recommend that you put a comment in your appraisal report explaining why you made this decision. This will be helpful to readers (and reviewers) of your report. This 3-month guideline does not imply that a time adjustment is unnecessary when the period is less than three months, if the appraiser thinks one is necessary.


Ask Henry

Lakeshore Frontage Adjustments


I'd like to get your insight into how you would adjust for lakefront footage. Obviously more is better and more valuable -- but at an incrementally diminishing rate per linear foot, right? For example, take two identical properties, except that one has double the lakeshore of the other, 200' versus 100'. Clients seem to think the second 100' should be adjusted at the same rate as first 100' and have been asking for report revisions! Often they want the footage to bracket the subject, and can't understand why the parcel with more frontage is adjusted at a lesser rate per foot than the parcel with less. What should I say?

Dear S:

There is no benchmark or rule that I am aware of that works. You have to find some matched pairs of sales in your market area upon which you are going to base this adjustment. I don't think you can jump to the conclusion that sales with substantially larger lakeshore frontage require a smaller square foot adjustment without some evidence.


Ask Henry

Extraordinary Assumptions, Retrospective Appraisals

Hello Henry,

I am developing a retrospective field review with an opinion of value for investigative purposes. The effective date is 4-1/2 years prior and the subject and all (three) comparables were investor rehabs/resales in an economically distressed neighborhood, with price increases of 50 - 60% within 3-9 months.

The main issue with the report under review is data verification and the credibility of the comparables' cash equivalent sales prices. Primarily, no 3rd party verification sources were cited and it does not seem that financing concessions were properly verified or adjusted for if they did exist. Seller-assisted financing was common in the market at that time. Most weight was given to Sale #1 which did not have an MLS listing. Sale #2 had a potentially unsupported 8%+/- upward condition adjustment for 'avg' vs 'good' condition; this sale had a "blank" listing #, but also had a 60% price increase within nine months, indicating that it may have rehabilitated in a manner similar to the subject. My research has revealed two sales that support the original value that have no MLS listings; and other "blank" MLS listings that appear to have been investor rehab/resales. I cannot verify these sales or the conditions of the sales in the normal course of business after an elapse of 4-1/2 years. Is it acceptable to use these sales in developing my OMV with the extraordinary assumption that they had no sales concessions that affected their prices? Or by using these unverifiable sales would I be committing the same poor practices found on the original report i.e., the pot calling the kettle black??

Thank you for your time,

Michael A. Ciaccio
Certified Residential Appraiser RD6539

Dear Michael,

I can only give you some general advice, as it is my policy not to comment on specific appraisals.

  1. It is up to the appraiser to select the most comparable sales. There are no USPAP restrictions on how this is done.
  2. It is up to the appraiser to make whatever adjustments are needed, keeping in mind that using unsupported adjustments can lead to trouble as the USPAP requires that the appraisal be credible.
  3. The USPAP has specific instructions about using "Extraordinary Assumptions" (2010-11 USPAP U-3 & U 18). From what you say, they may be appropriate in this instance. Be sure to follow the disclosure requirements.
  4. You must decide if your report is credible. If there is a reasonable doubt in your mind about its credibility, you should not make the appraisal, as it would violate USPAP to do so.