In the sales adjustment process, which item is typically adjusted for first?

In the sales adjustment process, the terms of financing are typically adjusted for first because financing can significantly impact the sale price of a property. Different financing arrangements can change the effective cost to the buyer, influencing their willingness to pay a certain price. For instance, if a property was sold with favorable financing terms, such as below-market interest rates or seller financing, it may sell for a higher price compared to an otherwise similar property that required conventional financing at higher rates. Thus, adjusting for financing first allows appraisers to create a more accurate comparison between properties by accounting for the financial implications on their sales prices right at the outset of the adjustment process.

In comparison, factors such as location, size, and time adjustments come into play thereafter. Location can impact value significantly, but it is generally perceived as more stable than financing terms, which have varying impacts based on the economic environment. Similarly, size adjustments account for differences in square footage or property features and are also adjusted later, as these can be considered more static characteristics once the pricing is established based on financing and the current market condition. Finally, time adjustments typically address changes in market conditions over time, and they are conducted after evaluating specific financial terms and physical characteristics of comparable properties.