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Appraisers have asked me about USPAP and bracketing. What they want to know is if it is really possible to bracket every difference there is between a subject and its comparables? Spoiler alert: the short answer is “NO!”. Unfortunately, the long answer is “NO!”, too. To derive an adjustment via bracketing is just as effective and practicably applicable as is paired-sales analysis. Paired-sales analysis is a great tool. But where can you find the sales of two properties exactly the same in all aspects to each other, except one? That’s the problem. With incredibly rare exceptions, such properties do not exist.
When it comes to USPAP and bracketing, we appraisers have the same dilemma we have with paired sales. You won’t get the contributory value of a third bedroom by bracketing such a property with the sale of a two bedroom house and a four bedroom house. Why? All other things being equal, there are too many areas of inferiority in a two bedroom house. Therefore, there are too many areas of superiority in a four bedroom house. Given this, it should be clear that bracketing, at this level, results in a meaningless answer. Yet, our friends, the lenders, want us to bracket every difference there is between the subject and the comps. To assume this, begs the question every difference must have a counter-balancing adjustment. Simply, the market does not support this contention even if the AMC’s reviewer insists otherwise.
So, when it comes to USPAP and bracketing, appraisers understand it is a tool. But just every problem a carpenter faces is not a nail, a hammer is not the solution to all carpentry problems. Therefore, bracketing is not the solution to carving out an adjustment for every difference there is between the subject and a comp. Shouldn’t this be obvious?
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