COMPARABLE SELECTION & ADJUSTMENTS IN BIG BEAR
Comparable sales are selected utilizing the principle of substitution, which means that a knowledgeable buyer would not pay more for a property than he could purchase a substitute or equal property for. Sales comparables for appraisal purposes have as many similarities in time of sale, proximity of location, views, lot size, age, condition, gross living area, bedroom and bathroom count, garage size and updated and upgraded features. The question to ask yourself is: Would a knowledgeable buyer substitute these comparables for the subject property he is interested in, if it were no longer available?
BRACKET AS MANY OF THE VARIABLES AS POSSIBLE
Site adjustments are based on the differences of lot size between the subject and the sales. Adjustments applied are based on the contributory value of the added land, not the actual cost. A 2500 sf lot compared to a 5000 sf lot in Sugarloaf may require a $5000 to $15,000 adjustment where a 10.000 sf lot compared to a 15,000 sf lot in in Fox Farm may not require any adjustment.
Adjustments for view may reflect various situations. Mountain views of Snow Summit or Bear Mountain are generally less valuable than lake views because the appeal for ski slope views is part of the year compared to year round for lake views. Being across the street from commercial property or locations on busy streets reflect negatively on a property due to increased traffic noise and decreased privacy.
AGE AND CONDITION
Combine adjustments for age and condition into a single condition adjustment. If the properties are unequal, how much discount would a buyer demand to purchase the lesser property. This sometimes would equal the cost to bring the lesser property up to the better property condition? The condition adjustment considers observable differences in actual and effective age and condition of the comparables and the subject with regard to routine and deferred maintenance. Are there updates to the kitchen, baths and living areas to meet current standards. Adjustments for replacement: carpeting, exterior and interior paint, roof, water heater and furnace are maintenance items, and not typically adjusted for as they are expected to be properly maintained by a typical buyer.
DESIGN AND QUALITY
Design and appeal adjustments reflect differences between home designs such as log style, Victorian, typical mountain design, gambrel, chalet, A frame, etc. An adjustment in this category may also be based on the market reaction to various front elevations, exterior siding and curb appeal. The construction quality adjustments recognize differences in architectural design, building construction materials and workmanship, and the amount and quality of exterior and interior finish.
BEDROOM AND BATH ROOM COUNT
Adjustments for bedroom and bathroom count reflect the market reaction of importance of these features. There may be little or no adjustment for a 2 bedroom home with a loft or den space compared to a 3 bedroom home, because these bonus areas could be used as additional sleeping areas.
GROSS LIVING AREA ( NO MORE THAN 25% LARGER OR SMALLER)
Gross living area adjustments are based on the differences in livable square footage. These adjustments may range from $30 to $100 per sf or more, depending on the design, quality and location of the dwelling. Generally, the typical buyer does not differentiate between homes that are within fifty square feet of each other and no adjustments are applied in this situation.
Whether there are stairs to climb from the parking area or the house is below the grade of the street are also considerations. Is the floor plan chopped up or are there 4 bedrooms on the 2nd floor with only 1 bathroom.
UNPERMITTED AND GRANDFATHERED IMPROVEMENTS
A separate adjustment may be applied for rooms that have been converted from garages, finished without permit or are detached from the main house. The adjustments applied are based on the contributory value of the improvements, not the cost to construct. More and more lenders are requiring permits for living area to be included in an appraisal. When the living area of your subject property differs significantly from the public record living space, you need to research it further.
MAXIMUM ADJUSTMENT GUIDELINES ARE:
INDIVIDUAL 10% OF SALE PRICE
NET 15% OF SALE PRICE
GROSS (TOTAL) 25% OF SALE PRICE
EXPANDING THE MARKET RADIUS BEYOND 1 MILE CAN BE JUSTIFIED DUE TO THE CHARACTER OF BIG BEAR AS A RESORT AREA WITH IMPROVEMENTS OLD AND NEW, LARGE AND SMALL, AVERAGE AND CUSTOM QUALITY ALL MIXED TOGETHER.
EXPANDING MARKETING TIME BEYOND 6 MONTHS IS ALSO POSSIBLE IN RARE OCCASIONS WHEN THERE ARE AN INADEQUATE NUMBER OF RECENT SALES COMPARABLE TO THE SUBJECT (A $3 MILLION DOLLAR LAKEFRONT SALE WOULD BE AN EXAMPLE)
IF YOU HAVE UNIQUE CHARACTERISTICS LIKE VIEW, BUSY STREET FRONTAGE, CUSTOM QUALITY OR ANYTHING YOU WANT TO ADD OR SUBTRACT SUBSTANTIAL VALUE FOR, YOU NEED AT LEAST ONE COMPARABLE WITH A SIMILAR FEATURE.
KEEP ASKING YOURSELF - WOULD A BUYER PAY MORE FOR THE DIFFERENCES IN THESE FEATURES, AND IF SO, HOW MUCH?