Building and Reading the Adjustment Grid

The grid is the record of the analysis: one column for the subject, one for each comparable, and a row for each category in which a difference was measured, with the adjustment and its source. It exists so that every figure in the range can be traced to a sale and a method, and so that a reader who was not present can follow the analysis without asking anyone.

Order of the rows. Concessions and financing first, then market conditions, then location and site, then condition, then living area, then room count, garage, below-grade area, and the features the market pays for. The order matters because the first two rows change the price that the remaining rows are measured against. The concession comes out first because the market-conditions rate measures the change in the price of the property, not of the credit, so the rate is applied to the price after the concession is removed.

The subject column comes first. Every comparison in the grid is made against the subject column, so it is completed, from the best available records, before any comparable is entered. Gross living area for the subject and each comparable is generally taken from the best available record (the assessor’s card, the public record, the MLS listing, builder plans or a prior appraisal), with the source noted. The assessor’s field card in the town hall, or online in most Connecticut towns, gives the recorded living area, year built, lot size, basement finish and outbuildings, and the building department’s permit file shows whether an addition, a finished lower level or a converted garage was permitted. Where sources disagree, the difference is noted, not guessed at, and the grid shows which figure was used, because a subject recorded 200 square feet too large moves every living-area adjustment in the grid by the same amount. Each comparable’s column is completed from the same sources: the closed listing, the field card, and the permit file where a feature is in question.

Sources. Each adjustment carries its source in the grid or in a note beside it: the pair or pairs behind a feature adjustment, the sales and factor behind the living-area rate, the segment trend data behind the time adjustment, and for a concession the MLS concessions field with the matched sales that measured its effect, or a note that none were available. A grid whose adjustments have sources can be checked; one whose adjustments do not is a set of numbers.

A worked grid. The subject is a 2,000-square-foot colonial in good condition with a two-car garage, in a segment where the market has risen four percent over the past year, the living-area rate is $60, a two-car garage against a one-car is $10,000 by paired sales, and the difference between excellent and good condition is $12,000 by paired sales.

At four percent a year the rate is one-third of a percent per month, and each time adjustment is rounded to the nearest hundred dollars.

Comparable A closed at $460,000 on a contract signed seven months ago. Time: up about 2.33 percent, $10,700, to $470,700. It is 100 square feet smaller: add $6,000. It has a one-car garage: add $10,000. Condition matches. Adjusted indication: $486,700.

Comparable B closed at $445,000 on a contract signed two months ago, with a $5,000 seller concession. No matched sales in the segment were available to measure the concession’s effect on price, so its face amount is the starting point, and the grid notes it. Concession: subtract $5,000, to $440,000. Time: up about 0.67 percent, $2,900, to $442,900. It is 100 square feet larger: subtract $6,000. Garage and condition match. Adjusted indication: $436,900.

Comparable C closed at $480,000 on a contract signed four months ago. Time: up about 1.33 percent, $6,400, to $486,400. It is 50 square feet larger: subtract $3,000. Garage matches. Condition is excellent against the subject’s good: subtract $12,000. Adjusted indication: $471,400.

Set out as a grid, with the source beside each row:

Totals. Each column is totaled two ways. The net adjustment is the sum of the adjustments with their signs, and the sale price plus the net adjustment is the adjusted indication. The gross adjustment is the sum of the adjustments without regard to direction, and it shows how much correction the sale needed, because adjustments running in opposite directions can cancel to a small net figure from a large amount of correction. Comparable A: net +$26,700, gross $26,700. Comparable B: net −$8,100, gross $13,900. Comparable C: net −$8,600, gross $21,400. Comparable C shows why both totals are kept: its net of −$8,600 understates the $21,400 of correction it needed.

The three indications are $436,900, $471,400 and $486,700. Comparable B, which needed the fewest and smallest property adjustments, sits at the low end; the two that needed more sit higher. That pattern is itself a question: whether Comparable B is the best evidence and the other two are being pulled up by adjustments, or whether B carries something unmeasured (a busy road, a dated bath) that the record did not show. The grid’s job is to make that question visible.

Reading a grid. Three things are read before any figure is checked. Do the adjustments run in the right direction? Does each comparable carry an adjustment for every difference the market evidence shows buyers pay for, and none for differences the evidence shows no price response to? Does any single comparable carry so many or such large adjustments that its selection should be reconsidered? A grid that passes those three reads can then be checked figure by figure against its sources.

The three reads, worked. Direction: a comparable 100 square feet larger than the subject, shown with +$6,000 for living area, has been adjusted the wrong way, and its indication is wrong by $12,000, twice the adjustment, because the sale should have moved $6,000 down and instead moved $6,000 up. Completeness: a comparable with a one-car garage against the subject’s two-car, carrying no garage adjustment, is $10,000 low in that market; equally, a $1,500 adjustment for a difference in lot size the segment’s sales show no response to adds a figure the market does not support. Replacement: a comparable carrying adjustments for time, size, garage, condition, a second bath and a finished lower level, with a gross of $68,000 against $14,000 to $27,000 on the others, is a warning that it may not have been competing for the same buyer, and a more similar sale, even an older one, is sought to take its place.

Other property types. The rows follow the property. A condominium grid carries rows for floor level, end or interior position, parking, and the monthly association fee where the complex’s sales show buyers respond to a difference in it; lot size and garage often drop out. A two- to four-family grid carries rows for the number of units, the unit mix, and the rents the units command, alongside the physical rows. The principles do not change: market conditions and concessions first, a source beside every adjustment, and both totals for every column.

Downloadable: the Adjustment Grid Worksheet, reissued for this course with a source column beside every adjustment and the market-conditions and concessions rows placed first.