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A dictionary definition of “adjust” is:  “alter or move (something) slightly in order to achieve the desired fit, appearance, or result.”

When I “carefully” pick some comps, I use my judgment to need as little fudging as possible.  But it never seems to work out just right.  There are three practices to adjust the fudging:

  1. Pretend some adjustments are not really needed, or too hard to figure out.
  2. Pretend you know a “reasonable” adjustment amount.
  3. Pretend you have magical calculations,

If it doesn’t work out, just adjust the adjustment until things come closer together.  Of course, this is arbitrary, ‘cause the comps picked — determine the outcome, adjusted by my adjustments.

This is the second in an intended coming posts on the reality and the fallacy of adjustments.  Is this heresy?  We all know adjustments are necessary.  We have standards!  We have been told over and over how important are adjustments.  Hundreds of times in The Appraisal of Real Estate, and in all the courses required for licensing and designations.

Adjust. Except when you don’t need to adjust.  Or can’t.

We are taught that sometimes you just cannot calculate or reckon an adjustment.  Sometimes you can just apply a “judgment” adjustment!  And best of all, sometimes you can just use “qualitative” analysis, when you cannot quantify or “educatedly guess” an adjustment.

What is not clear is when you can and when you can’t “reasonably” reckon an adjustment.  Not much of a science help here.  You use your judgment to determine whether your judgment is enough.

One more problem.  The goal of appraisal under USPAP is to be credible, defined as “worthy of belief.”  (Strive for what others will believe, want to believe — not what is right!)

So the goal is not reliability or usefulness!  For a loan collateral, an investment decision, or just plain fairness in legal or tax affairs.  Not reliability.  Not usefulness.  Not fairness.  But worthiness of belief!  The goal is salesmanship, not good analysis.  Belief, not truth.  Justification, not results.  Explanation, not transparency!

Form your opinion, then figure out how to support it.  Biased or not!  Justify, not analyze!  As the definition above says:  “achieve the desired fit, appearance, or result.”

Then we have a strange thing, from “the nation’s foremost authority on the valuation profession” (self-declared).  An apparition:  USPAP says nothing about adjustments.  Not one word!  Not even defined.

In The Appraisal of Real Estate, the word appears over 600 times.  But – –  it is never defined.  But trust me, I know an adjustment when I make one!

In coming posts of this Analogue Blog, we will look at the many issues around “adjustments.”  Everyone knows what one is, but no one seems to be able to define it or show how to calculate it.

We even have conflicting instructions about sale conditions and time adjustments.

In the Stats, Graphs, and Data Science class, we present what we do know, and how to calculate what can be calculated – and how to handle the rest.  EBV©, (Evidence Based Valuation) is the answer.