When they ask in a bpo for age adjustment compaired to the subject is there a formula you use?

I use $1000 per year for adjustment, if necessary.

What does your market tell you to use? How much difference does age show in sold prices - when using comparables that are otherwise as identical as possible?

Determine and track this - and you'll be a step ahead of most of your competition - and you can impress your clients by telling them how you did this - and more so if you show them.

Then of course - there are those that just pluck a number from the air to make their BPO work.

Your choice, do you go to stage 2 or not. 1. It depends on you, 2. then on the market you work in.

I've looked at actual appraisals and it varies all over the freaking place - no rhyme or rhythm.

If that is what you see from appraisals - then they were too lazy to calculate their market - or - what they show is based on individual neighborhoods - location, location, location is still a critical factor and would vary greatly from neighborhood to neighborhood - if dictated by the market.

Don - I wouldn't doubt they are lazy. I used to do BPOs for a local franchise (several of their offices around here til things went bust) and I consulted appraisals I have on file thinking, 'well, THEY know what they're doing' which I discovered they apparently don't - not when I see such variance - usually seems like they take about $100-400/year for age difference after the first 10 years.

Perhaps it's just my market - everything's crazy. I know that sounds silly but when I do comps and I'm trying to find good ones...I shake my head when I see a wonderful, newer home that sold low, and, yet I'll see another one that sold waaay higher that's smaller and not as nice. I really don't think agents in my area even TRY to do itemized adjustments like an appraisal or that they're really looking for GOOD comps. Makes it hard as h*ll to find good comps.

Actually - with people being so unsure about everything in life right now- many are advised by agents to accept any offer they get - or despite the advice of their agent -many accept any offer. You're so right - nothing really makes sense - but we still go through our due diligence to create the best final product we can.

But as far as how to determine age variances - what I said still works where the comps are available. Honestly - I have never had anything close to identical comps - so I always have to adjust before I can figure the variance.

Like everything else in this business there's no hard and fast rule. 2 years old vs 12 years old. 10 years may deserve an adjustment. 60 years vs 70 years. 10 years doesn't deserve an adjustment. 150 vs 170 30 years but may not deserve an adjustment. 10 years in original condition vs 40 years with modernization may not deserve an adjustment if the effective age equates of the older equates to the actual age of the newer.
It's kind of like "how much do we adjust per square foot"? That differs between a 100,000 home and a million dollar home. Also between a home in the 800 to 960 sq ft is a huge difference 20%. 6000 vs 6500. more spread but lesser percentage.
An appraisal course helps tremendously from a methodology standpoint, although I didn't get a license since that would interfere with the freedom I have to be creative with BPOs. If the adjustments start to look like an algorythm, chose a different comp.

I have been doing quite a few MTRs for Clear Cap, so I have a chance to see quite a few appraisals. I rarely see an adjustment for age, even when an age adjustment would make sense to me. Yesterday's, for example, was for a house about 50 years of age. One of the comps used by the appraiser was over 100. No age adjustment. Appraisers seem to vary in the amount they will adjust for bathrooms more than for bedrooms. No adjustment for bedroom, but large adjustment for bath. So although I don't necessarily understand, or agree, with the adjustments, I am interested in what they are doing.

Flying by the seat of my pants here, but this is what I use:

If the Subject property is at least 20 years old, and a comp is more than 10 yrs different in age, I add or subtract $5,000. If the comp is more than 20 yrs different in age, I add or subtract $10,000.

If the $5k or $10k is really going to mess up the values, I'll scale back to $3k or $7k or something like that. Being consistent is key.

I can usually find enough closer-aged comps in newer properties, and especially in new construction & the 0-5 yrs age group that I don't need to make any age adjustments.

What's really hard is when I have a 100 yr old comp and a 70 yr old Subject. Man, I probably don't want to be messing around with either one of those houses!

edited to add: Sometimes, if an age adjustment doesn't make sense, because of prices, I'll comment that homes in this area (or this particular comp) have been renovated more than once and so effective remaining life is equal to the youngest property I'm working with. That's worked pretty well!

^This works pretty well in SW Oklahoma, but who knows if it will work elsewhere (prices are lower here, and a lot of what works elsewhere, doesn't seem to work here - and vice versa).

Instead of listening to advice from senior members calling people 'lazy' and 'flying by the seat of your pants', try this:

look up 'estimated remaining economic life' and 'effective age' and apply this to the home.

Thank you everyone. Your suggestions have helped me with decisions on "age adjustments".

jstip - touche', now just how does one calculate, 'estimated remaining economic life' and 'effective age', and how does this apply to age adjustments? I not indicating these are not related - but hey are not the same thing.

Using barb43's example: How to compare a 100yo house to a 70yo house.

You don't look at the chronological age. My home is over 100 but has been fully updated. 200 amp service, furnace, windows, etc. The house now has an effective age of 30-50, for example. Easy to compare this to a 70yo house with similar updates.

The White House was built around 1800. But with wireless internet, new toilets and marble floors, it would be hard to say it is 200 years old.

If you want to get real technical, factor in the 'estimated remaining life' on components of the house. A roof has a life of 30 years and was installed 20 years ago. 10 to go, nearly time for a new roof. While not an 'age' adjustment, a condition adjustment would apply regardless of the true or effective age, but the life and age do factor with time.

You can have a 15yo home that has been beat to hello by the half dozen kids mom has. Carpet is just beat, walls abused, fixtures well worn, absence of any maintenance. This 15yo homes looks 30.

In summary, don't focus on the chronological age of the home, look at it's effective age, comparing condition/quality/updates/modern amenities.

I agree in part - most 30 year shingles have about a 22 year life cycle. Banks use to have me to inspect roofs to determine if they had at least a 5 year life left in them and write the letter - who knew - but at times I was surprised to find out they were only 5 yrs old. (I was a licensed general contractor for many years)

Also - I was looking for specifics on how to determine effective age - if you use it - you should be able to explain how you arrived at it.

With age adjustments in the market - your market will determine what it is and it could fluctuate.

Again - some QC will throw numbers at you asking you to use them - but they cannot defend their amounts or tell you how they were determined.

My point is - if you use it - you should be able to defend it, even if you just say it is from working in this market for x number of years and this is my professional opinion - but that is what we all use when we don't really know.

Marshall & Swift (residential cost handbook) has a real good chapter on how to determine effective age of a home, not a real complex formula but I wouldn't provide it to a client at a $40 price point. Basically you go through the components of the home (roof, carpet, furnace, anything that depreciates) and calculate the age.

Something to read up on to give you a perspective to look at homes differently. Age adjustments are influenced by the effective age. You can have the same aged home, one original, one with new roof, siding and windows, making it a 'newer' home because it will last longer/live longer than the non-updated home.

Your "effective age" is adjusted by your repairs/updates. The repair/replacement cost for a new roof, appliances, heatings, siding, painting... etc etc, basically updating the subject should bring the subject up to todays "standards" thereby eliminating a need for a direct effective age amount.

If the subject was built in 1950 and is original throughout, your repair/updates would include kitchen, bath, paint, siding, roof etc. as these all have an impact on value. Typical buyer would say $$"It's old and needs updating"$$ If you were to replace all of these things, your effective age is improved.

Well said Bonomax. If you were in my area, I would certainly want you on my team. LOL

You LIE!! LOL

I agree in part - but there is a need to be able to quantify and calculate what repairs and updates add to the 'effective' age - then the same for that age vs new.

But we're losing site of how the numbers are found - and that is basically the function of the market not a set formula - but everyone and his sister seems to have a formula they use that works - whereas the market is the only place that will prove or disprove it.

In other words - a 100 year old house that has been well maintained through the years will automatically had parts updated at different intervals, if not several items at the same time. Contrast that to a 100 year old house that has set empty for past 40 years, but well maintained, or the 100 year old home that has very few updates and held together with patchwork repairs, bailing wire and duct tape. In the Pinehurst area we have all three in the priciest parts too - not in the volume I'm sure there are in Jack's area - our specifically the areas where my sister lives in the suburb communities surrounding Boston.

They are all 100 year old homes - just in different condition - 'how' would we determine the effective age of each and what would the age adjustment be. For sake of the example - they are all 3/2 1800' with no functional obsolescence.

Short of a total rebuild - a 100 year old house will never have the same effective age as new. (of course it would be new if it was a total rebuild) That is in practical terms - but the market may show different it pricing.

The question is 'how' not why or how to handle the results after they have been determined or what they are - but how to determine the numbers.

I agree for the most part Pine. There are no cookie cutter adjustment folmulas. Perhaps that's the reason we all become so frustrated with QC folks that expect every aspect of a BPO to fit nicely into a predetermined slot. Think outside the box and think with a typical buyer in mind.
BTY...My comment to Bonamax is beacuse he's been a key individual in my operation for years. Actually, he's the party that first put me on to AOL....blame him!!! LOL

Everyones responses turned the light bulb on :-) I gues I was just so frustrated I couldn't think. Which happens often lately.