What is the purpose of a "sales adjustment grid" in appraisal?

The sales adjustment grid is an essential tool used in the appraisal process, primarily for comparing the characteristics of similar properties in order to adjust their sales prices. When appraisers analyze comparable sales, they often encounter differences between the subject property and the comparables. To ensure accurate valuation, each relevant characteristic—such as size, location, age, and condition—is assessed.

The grid allows appraisers to systematically adjust the sales prices of comparable properties based on these differences. For example, if the subject property has one less bedroom than a comparable property, the appraiser would adjust the price of that comparable downward to reflect this difference, enabling a more accurate comparison. By applying these adjustments in a grid format, appraisers can visualize the impacts of various factors on property values and arrive at a fair market value for the subject property.

This methodology relies on the principle of substitution, where a buyer would not pay more for a property than the cost of a similar property that adequately meets their needs. Thus, the sales adjustment grid is critical for ensuring that the appraisal is grounded in reality and reflects true market conditions.