Enter the square footage and prices of two different properties into the calculator to determine the appraisal adjustment factor.
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Appraisal Adjustment Formula
The following formula is used to calculate an appraisal adjustment factor:
AF = P1 - P2 / SQF1-SQF2
- Where AF is the appraisal adjustment factor
- P1 is the price of the more expensive property
- P2 is the price of the cheaper property
- SQF1 is the total square footage of property 1
- SQF2 is the total square footage of property 2
Appraisal Adjustment Definition
What is an appraisal adjustment factor?
An appraisal adjustment factor measures the ratio of the difference between the price and square footage of two different properties. It’s used to account for any changes in demand that can occur around properties on a short-term basis.
How to calculate appraisal adjustment?
First, determine the price and square footage of the first property. For this example, the first property had a total of 1300 square feet and sold for $300,000.00.
Next, determine the price and square footage of the second property. In this case, the second property was 1100 square feet and sold for $250,000.00.
Finally, calculate the appraisal adjustment factor using the formula above:
AF = P1 – P2 / SQF1-SQF2
AF = $300,000-$250,000 / 1300 – 1100
AF = $250/ft^2