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So what is BRACKETING and how does it relate to this approach to value. When you select comparable's to adjust for difference with your subject property it is important to pick Higher and Lower variables or items like GLA, condition, views, site area and large exterior amenities thus placing the subject's variable towards the middle, so that the positive and negative adjustments will tend to cancel each other out. This also reduces the impact of using adjustment factors that are too high or low.
It is important to use reasonable adjustment factors but time spent on a comprehensive detailed support for every adjustment factor would probably increase the amount of time spent on the assignment and raise the appraisal fee to a point where clients simply wouldn't pay for an appraisal. 

Some adjustments are calculated by multiplying an adjustment factor times the quantity difference between the subject and the comparable, e.g., if the GLA "Gross Living Area" for the subject property is 2,000 sqft and for the comparable, 1,800 sqft, the difference, 200 sf would be multiplied by the adjustment factor. If the GLA adjustment factor was determined to be $50  per square foot, the adjustment would be $50 x 200 sqft = $10,000 added to the comparables sales price. Obviously, the smaller the difference between GLA's, the smaller the adjustment, regardless of the magnitude* of the adjustment factor. So, the greater the similarity between the subject and the comparables, the smaller the impact of a too high or too low adjustment factor. Our next blog will continue with the Sales Comparison Approach and bracketing.

*The GLA adjustment factor relates to an area's cost replacement value, depreciated. We will discuss this topic further under The Cost Approach which will be addressed in a future blog.   

We start with the best selected comparable's, adjusting their sales price for differences with the subject property in date of sale, site size, design of the house, location, view, condition, gross living area (GLA), bath count, parking, exterior amenities(porch, patio, IGPool, bulkhead, dock, etc), interior amenities(fireplace, central air conditioning, publc water, etc), and other features impacting value. The more similar the comparable's are to the subject, the fewer the adjustments will be required and more than likely, the smaller the adjustments are as well. My next blog-Adjustment Factors, Need assistance on buying or selling real estate, email: richard.abatelli@elliman.com 

Appraising residential real estate on the east end is unique since there is a lack of similar homes, views and sites such as we might see in developments further west. This places significant weight on the selection of comparable sales and the adjustments performed. Now that most lending institutions no longer require the Cost Approach in estimating value except for new or almost new construction, this market data or sales approach carries most if not all the weight in appraising residential real estate. Thus, the BEST selected comps & BEST adjustments will BEST estimate the property as of a specific date. Appraisers have guidelines and are subject to reviews from their peers unlike CMA's, so appropriate and accurate adjustments are a priority.
Check out my next blog(Part 2) where we will discuss this topic a little deeper.