Definition
An adjustment is a price change made to a comparable sale to account for differences. Comparable sold for $425,000 but has a pool yours doesn't? Adjustment down $15,000. It's detective work to make comparables truly comparable to your property.
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Adjustments are made to comparable sales prices to account for differences in features, condition, size, and other characteristics that affect value. Each difference between the comp and subject property requires a specific adjustment amount. Accurate adjustments depend on understanding the local market's value for specific features and conditions. The total net adjustments should be reasonable—if comps require more than 20-25% in total adjustments, they may not be truly comparable.
Pro Tip
Understand the adjustments in your appraisal. Large adjustments (>20% total) mean comparables aren't truly comparable. Ask your appraiser to explain adjustment logic.
Example
A comparable home sold for $425,000 but has a two-car garage while the subject has only a one-car garage (-$8,000 adjustment). The subject has a newer kitchen (+$6,000 adjustment). After all adjustments, the comparable's price of $425,000 becomes $423,000 for comparison to the subject.