Appraisal Fundamentals
How Appraisal Adjustments Actually Work
The mechanics behind the numbers that move a comparable sale toward — or away from — the subject property's value.
Once comparable sales are selected, the real analytical work begins: adjusting each one for the differences that remain, so it reflects what it would likely have sold for if it were identical to the subject property. Every adjustment amount has to be derived from the market — not guessed.
How Adjustment Amounts Are Actually Derived
Paired-Sales Analysis
Comparing two otherwise-similar sales that differ mainly in one feature (like a garage or a finished basement) to isolate what the market pays for that specific difference.
Bracketing
Choosing comparables both above and below the subject in key characteristics (size, condition, location) so the adjusted range brackets a supportable value rather than extrapolating from one direction.
Market-Derived, Not Cost-Derived
Adjustment amounts come from what buyers actually pay for a given difference, which is not necessarily what it cost to add that feature in the first place.
Reading Net vs. Gross Adjustments
A comparable with a small net adjustment can still have a large gross adjustment if several differences offset each other — more bedrooms but less square footage, for example. Appraisers and reviewers weigh both figures: a lower gross adjustment generally signals a more genuinely similar, more reliable comparable.
What This Does Not Mean
Adjustments aren't a matter of appraiser preference, and they aren't calculated from a fixed price-per- square-foot rate applied uniformly across every market. They're evidence-based, market-derived figures specific to that neighborhood and price range at that point in time — which is also why time and market conditions themselves sometimes require their own adjustment.
Frequently Asked Questions
Provided for general educational purposes based on USPAP and Fannie Mae Selling Guide adjustment standards. Last reviewed: August 2026.