One of the most important concepts in residential real estate appraisal is the concept of bracketing values. What this means is that when comparable sales are selected, every attribute of the subject is bracketed above and below by attributes of the comparable sales. For example, if the subject has 2,000 sf of living area, then comparable sales would be selected , say, of 2,200 sf and 1,800 sf so that the subject living area is bracketed, or in between these two values. The same goes for age, lot size, bedrooms and bathroom counts, and condition. This concept is particularly important if a comparable sale of the same size, age, lot size, and condition cannot be found.
The concept of bracketing is pretty much an industry standard. If the adjustments are correct, then the value is accurately attained by adjusting up from a smaller sale and adjusting up from a larger sale, thereby coming to the same conclusion from both ends of the range.
This is important to understand when looking for comparable sales. Most lenders require that the final adjusted value be bracketed both by the adjusted sales price and the unadjusted sales price. In other words, at least one of the original sales prices as the be equal to or greater than the final value conclusion.
For example, if the final value conclusion of the report is $350,000, then one of the original sales should be over $350,000. This is good to know for real estate professionals trying to price a home. When pricing, you should have at least one recent sale above your contract price so that the property will "appraise" with the lender's appraiser.
Anyway, that's just something to keep in mind when trying to figure out the value of your home. If you have any questions or just want more information, feel free to contact me at 760-525-2742 or at firstname.lastname@example.org
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