What are the two types of adjustments an appraiser can make in the sales comparison approach?

In the sales comparison approach, appraisers make adjustments to account for differences between the subject property and comparables in order to estimate the property's value accurately. The correct understanding here involves both dollar adjustments and percentage adjustments, which are fundamental concepts in this process.

Dollar adjustments refer to specific fixed amounts that reflect the monetary difference attributable to variations between the subject property and the comparable properties. For example, if a comparable property has one more bedroom than the subject property, an appraiser might determine that this additional bedroom is worth a specific dollar amount.

Percentage adjustments involve adjusting the value of the comparable properties based on a percentage change rather than a fixed dollar amount. This might be used when comparing properties with different features when the impact of those features is understood as a percentage of value. For instance, if a property’s value is perceived to increase by 10% due to a location advantage, this would be expressed as a percentage adjustment.

Understanding these two kinds of adjustments allows an appraiser to respond to the nuances in property features and differences between the subject property and comparable sales, ultimately leading to a more accurate valuation.