The Adjustment Categories That Matter
The differences between a subject and a comparable that produce a measurable price response in a Connecticut residential market fall into a manageable set of categories. They are listed here in the order they are usually considered, with the principle that governs each. The amount of every adjustment comes from the market, by paired sales or by a living-area rate derived from the sales at hand; where a difference resists measurement, bracketing bounds the subject’s position without assigning a figure. No category carries a standard figure. The facts for each category come from the record, not from the listing’s adjectives, and the record for each is named below.
Seller concessions, financing and sale type. Where the recorded price reflects something other than a typical sale, the price is adjusted first, before the market-conditions adjustment and the property comparisons. A $10,000 closing-cost credit on a $460,000 sale is adjusted for the credit’s measured effect on price, read from matched sales where they exist; where they do not, the $10,000 face amount is the starting point, the comparable starts from $450,000, and the analysis notes it.
Market conditions between the sale date and today. Where the market has moved since a comparable closed, its price is adjusted to the present, after any concession is removed and before any other comparison is made. The rate is read from the trend in the subject’s segment, and the interval runs from the contract date, the date the contract was signed by both the buyer and the seller, not the closing date.
Location within the market area. A premium for water frontage, a cul-de-sac, open space behind the lot, or a view; a discount for a busy road, a commercial neighbor, a utility easement, or a rear lot with deeded access. These can be among the larger adjustments in a grid and among the easiest to leave out, because the listing that produced the sale did not advertise the busy road. The facts come from the map rather than the listing: the town’s GIS viewer, an aerial photograph and a drive past the comparable show the traffic, the neighbor, the power line and the slope that the remarks left out. A location adjustment measures a difference inside the subject’s market area. A difference between market areas is not adjusted: a sale from a different market area is ordinarily set aside, however well a pair across the boundary appears to support a figure, because a location adjustment does not make it a property that competes with the subject.
Site. Lot size where the market pays for it. In a subdivision where every lot is a quarter to a third of an acre, a difference of a tenth of an acre usually produces no price response and no adjustment. Where lots range from a quarter-acre to two acres, size is paid for and is measured. Usable area matters more than recorded area: a two-acre lot that is mostly wetland or ledge, or that falls steeply away from the house, may offer a buyer less than a level acre, and the assessor’s field card, the town’s wetlands mapping and the photographs show the difference. Public water and sewer against a private well and septic system is a site difference as well, and where both occur within one market area it is measured by pairs like any other.
Condition. Between a renovated house and an original one of the same size in the same neighborhood, the difference can be large; as an illustration, in one market it might run $30,000 to $60,000. These figures are illustrations only and are not used in an actual CMA; each adjustment comes from the sales in the subject’s own market. Condition is frequently underweighted, because it is recorded in listings as adjectives and compared as adjectives. The comparison is made on facts: the kitchen, the baths, the roof, the systems, the deferred maintenance. Building department permit records show when work on a roof, a furnace, a septic system or a kitchen was permitted, and the listing photographs show the finishes.
Gross living area. A frequent adjustment, derived by the Ratterman Method at a rate specific to the market and price tier. Living area is the finished, above-grade area as defined by the ANSI Z765 standard. 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. Where sources disagree, the difference is noted, not guessed at. The ANSI standard is taught so the agent knows how the appraiser measures and why the appraiser’s figure may differ from the record.
Room count. Bedroom and bath differences are adjusted where the sales show a price response to them. A missing full bath usually warrants an adjustment; the difference between five bedrooms and six usually does not. Diminishing returns apply at higher counts. Bedrooms are counted as the record supports them. A house on a private septic system has a system designed for a stated number of bedrooms, and the local health district’s records show it; a fourth room advertised as a bedroom on a three-bedroom system is compared as what the records support. Where a comparable gained a bedroom by dividing existing space, its living area did not change, and any adjustment is for the configuration alone.
Garage. Presence, number of bays, attached or detached. A two-car garage against none is ordinarily a paired-sales question. An oversized or tandem garage, a detached garage across the drive, and a garage converted to living space are each compared as buyers in that market treat them.
Finished below-grade area. Not living area, but paid for. Adjusted separately where the difference between subject and comparable is material, at a rate well below the living-area rate.
Features the market pays for. An in-ground pool in Connecticut may add little, nothing, or a negative amount depending on the buyer pool and the property’s price tier; the answer comes from paired sales, not from the cost of the pool. Outbuildings, a finished room over the garage, central air in a market where it is not standard, and similar features are treated the same way.
How it applies. A grid is read against this list in two directions. Every category in which the subject and a comparable differ in a way the market pays for carries an adjustment, and every adjustment corresponds to a real difference. A grid with an adjustment for a 200-square-foot difference and none for the busy road has measured the small thing and left out the large one.
One comparable, read against the list
The subject is a 1,900-square-foot colonial on a level half-acre with public water and sewer, a two-car attached garage, two and a half baths, an updated kitchen, original baths and an unfinished basement. A comparable that closed at $498,000 on a contract signed four months ago is a 1,980-square-foot colonial on a level half-acre with public utilities, a two-car attached garage, two and a half baths, a kitchen and baths renovated the year before the sale, and a finished basement of 600 square feet. It backs onto a town conservation parcel.
Read category by category, five categories carry an adjustment and the rest do not. Market conditions apply if the segment has moved in four months. Location differs, because the conservation land behind the comparable is a premium where pairs in the market area show buyers paying for it. Condition differs on the baths, both kitchens being updated. Living area differs by 80 square feet, which at a segment rate of $60 is $4,800. Below-grade area differs by 600 finished square feet and is adjusted at its own, lower rate. Site, room count, garage and utilities match. Every property adjustment on this comparable runs downward, because the comparable is superior on each difference. A sale of that kind is useful evidence for the top of the range, and it is also the sale in which an unmeasured advantage would carry the range upward.
Other property types
The list changes with the property type. For a condominium, comparables come first from the same complex, where the site and much of the location are shared, and the categories that carry adjustments are the unit’s position (floor level, end or interior unit, exposure), deeded or assigned parking, storage, and the condition of the unit. A difference in common charges between complexes is read through the sales, because buyers weigh the monthly charge alongside the price. For a two- to four-family property, the number of units and the configuration of each (bedroom count, separate utilities, parking) generally matter more than total living area, and the rents the units produce are part of what the buyer is paying for. For new construction, the lot premium and the options included in each closed sale are identified before any comparison, because two houses of the same model in the same development can differ by tens of thousands of dollars in upgrades.