Adjustment
A dollar or percentage modification applied to a comparable sale's price to account for differences between the comparable and the subject property. Adjustments are always made to the comparable, never to the subject.
Adjustments compensate for measurable differences in features such as site size, gross living area, room count, condition, quality, location, and concessions. If the comparable is superior to the subject in a particular feature, a negative adjustment is applied (and vice versa). Adjustments should be market-derived whenever possible — extracted from paired sales analysis, regression, or other market data. Fannie Mae guidelines suggest that net adjustments should not exceed 15% and gross adjustments should not exceed 25% of the comparable's sale price, though these are guidelines rather than hard limits.
Related Terms
Comparable Sale
A recently sold property that is similar to the subject property in terms of location, size, condition, and features, used as evidence to support the appraiser's opinion of value in the sales comparison approach..
Sales Comparison Approach
A valuation method that estimates a property's value by comparing it to similar properties that have recently sold in the same market area.
Paired Sales Analysis
A technique used to estimate the value contribution of a specific property feature by comparing two sales that are identical except for that one feature.
Bracketing
The practice of selecting comparable sales that are both superior and inferior to the subject property in key features, so that the subject's indicated value falls within the range of adjusted comparable values..
Gross Living Area (GLA)
GLAThe total finished, above-grade living area of a residential property, measured in square feet.
More in Valuation Approaches
View allCost Approach
A valuation method that estimates value by calculating the cost to reproduce or replace the improvements, subtracting accrued depreciation, and adding the land value.
Income Approach
A valuation method that estimates a property's value based on the income it generates or is expected to generate.
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..
Reconciliation
The process by which an appraiser evaluates and weighs the results from the different valuation approaches (sales comparison, cost, and income) to arrive at a final opinion of value..