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Total Gross and Total Net Adjustment Percentages

   Some functionality described in this section requires CC Plus 1

See Also: Comparison Analysis Overview

Designating a Subject

Associating Comparables

Grid Tab Overview

Customizing the Look of the Grid

Using Grids and Comparables in a Narrative

Supplemental Adjustment

 

Comparison Analysis


 

The Calculations are Not Always What They Seem

It is traditional for the Total Gross Adjustment percentage and the Net Adjustment percentage to be displayed on a residential adjustment grid form.  Typically the adjustments on the form are made in dollars and there is little question about how to calculate and display these percentages.  However, when presenting a commercial grid where percentage adjustments are made, the calculations are not as straight forward as they may seem.  Adding the individual nominal line adjustments plus the Time/Market Conditions Adjustment will not necessarily be equal to the actual calculated Total Gross Adjustment and Total Net Adjustment.  We address this topic in this section and describe how the Total Gross and Total Net Adjustment percentages are calculated and presented on the comparison grids.

 

The display of these Adjustment Percentages is optional.  To turn them on or off, display the Report Properties window, select the Report Formatting tab, and look for the checkbox labeled Show Total Adjustment Percentages.

 

 

Total Gross Adjustment Percentage Calculation

 

   

Time Adj.Contribution = ABS(Comp.Price Per Unit before Adjustments x Time Adjustment)

Line Adj.Contribution = ABS(Time Adjusted Price x Total Line Adjustments)

 

Time Adj.Contribution

Supplemental Adj.Contribution

Line Adj. Contribution

= Gross Adjustments

 

Total Gross Adjustment Percentage = Gross Adjustments / Comp.Price Per Unit before Adjustments

 

 

 

Total Net Adjustment Percentage Calculation

 

 

Comp.Price Per Unit after Adjustments

-Comp.Price Per Unit before Adjustments

= Total Net Adjustments

 

Net Adjustment Percentage = Total Net Adjustments / Comp.Price Per Unit before Adjustments

 

 

Even when adjustments are displayed as percentages, the calculation must be based upon that actual dollars values that result from applying the percentages.  The line item percentages are applied to arrive at the Adjusted Price Per Unit, but are ignored when determining the actual resulting Adjustment percentages.  

 

This method is used because it does in fact reveal the actual Adjustment percentages.  If you convert the grid to display dollar amounts (which can be done by toggling a button in Commercial Complete), you will get the same Adjustment percentages.  Adding the individual line item percentages may or may not get close to the actual Adjustment percentages.  This is why we add a footnote below the Adjustment percentages that are displayed on the grid.

 

Percentages are provided as a guide and include a Time Adjustment, if applied. Individual Percentages may not add up due to rounding and compounding.

 

Of course, this footnote is not comprehensive and each appraiser must decide what supplementary explanatory text should be included in the narrative.

 

 

 

The Goal of a Report

When presenting calculations in a report, our goal has always been to provide sufficient information on the report so that the appraiser and/or a knowledgeable reader of the report can determine "where the numbers came from".  This is true of the Projected Cash Flow Report, the AMET calculation, and many others.  Presenting sufficient information does not mean providing all of the formulas (6 functions of a dollar, etc.).  We must assume that the reader has a level of knowledge that gives him the capability of understanding what he is reading.  If he does not, then he must gain more knowledge or the appraiser must expand his narrative to address the reader's deficiencies. 

 

The comparison grids have been designed with this goal in mind.  A knowledgeable reader can start with the Value Basis, apply the time adjustment and line adjustments, and verify that the resulting Adjusted Price Per Unit is correct.  He can also perform the calculations that are presented in the example grid below in order to verify the Total Gross and Total Net Adjustment lines.  An extreme example was selected for presentation below because it allows the reader to easily see that one cannot always just add up the individual line adjustments in order to arrive at the Total Net Adjustments percentage.