Time Adjustments
~11 min read · Extract market-conditions adjustments from paired sales and resale data.
The market-conditions adjustment — the 'time adjustment' — translates a comp's sale-date market into the effective-date market. Extraction is the skill: paired resales, repeat-sales trends, and monthly rates applied over the RIGHT number of months.
What the adjustment is
Markets move; a comp carries its contract-date conditions. The market-conditions adjustment corrects the comp's price for movement between ITS sale date and the appraisal's effective date — appreciation upward, depreciation downward. It adjusts for the MARKET's change, not the property's; and it keys to contract date (when the meeting of minds priced the deal), not closing date, when the two diverge materially.
- Comp's market → effective-date market
- Keyed to contract date, not closing
- It is a market adjustment, never a property adjustment
Extracting the rate
Support comes from data, not vibes: sale-resale pairs (the same property selling twice without physical change isolates pure market movement), paired current-vs-older sales of similar homes, repeat-sales or median trend indices for the segment, and corroborating gauges (DOM, list/sale ratios, months of supply). Compute a monthly rate (total change ÷ months), then apply: adjustment = comp price × monthly rate × months between comp contract and effective date.
- Sale-resale pairs isolate market movement cleanly
- Indices and paired sales corroborate
- Monthly rate × months × comp price = the adjustment
Application discipline
Apply market-conditions adjustments first among market-level adjustments (after financing/concessions and conditions of sale) so later physical adjustments work on time-corrected prices. Direction discipline: rising market + old comp → UPWARD adjustment (its price understates today); falling market → downward. Flat segments justify zero — with the support stated. Never average away a trend the data shows.
Worked example
Effective date: October 1. Comp: contracted May 1 (closed June 15) at $400,000. Support: a tract-identical house sold January 2 at $380,000 and resold September 30 at $410,600 with no changes. Compute the monthly rate and the comp's time adjustment.
The resale pair: $380,000 → $410,600 over ~9 months = $30,600 total = 8.05% over 9 months ≈ 0.89%/month (≈0.9%). The comp's clock: CONTRACT May 1 to effective October 1 = 5 months (closing June 15 is irrelevant — the price was struck May 1). Adjustment = 400,000 × 0.009 × 5 = +$18,000, giving a time-adjusted price of $418,000 before physical adjustments. Direction check: rising market, older comp, upward adjustment — its May price understates October's market. The two classic errors both live here: counting from closing (4.5 months, wrong) and adjusting downward because 'the comp is old.'
Common exam pitfalls
Counting months from the closing date.
The market priced the deal at CONTRACT — run the clock from contract date to effective date.
Reversing direction.
Rising market: old comps adjust UP (their prices are stale-low). Falling market: down.
Asserting rates without extraction.
Support the monthly rate with resale pairs, paired sales, or indices — an unsupported 'market is up 5%' fails review.
Contract to effective, at the extracted rate — old comps rise with the tide and sink with it.
Recap
- Adjusts the comp's sale-date market to the effective date
- Keyed to contract date
- Extract monthly rates from sale-resale pairs and trend data
- Apply before physical adjustments
- Rising market → upward on older comps; falling → downward
- Zero is a finding, not a default — support it
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