Page 26 - Regression Guideline

Underwriters"quesJon"and"response" con’t..."
Q: Please explain why you did not make an adjustment for site size.
A. The analysis and market data to consider site adjustments were considered in the SAVVI analysis. The justification for not making adjustments for site are the same and those outlined above for all the other factors that were questioned. Most of the questions contained in the clients request are found in the SAVVI report. The Hedonic Regression analysis is a more reliable tool to develop supportable and reliable adjustments. The results appear foreign to some observers who are accustomed to paired sales analysis"
Q: Will you just do paired sales like before?
A. Paired sales analysis is very difficult to support with exact properties to determine the value of those items in question such as a single bedroom, bathroom or walkout basement. The
SAVVI report is defendable based on the quantity and quality of the sales used to form the
report.
&
Q.&&Must&the&site&value&of&a&property&be&subtracted&from&the&sales&price&for&each&sale&in&the& MLS&data&sample&to&achieve&a&credible®ression&analysis?"
$" A."""Site"value"is"one"of"the"variables"included"in"the"SAVVI"regression"analysis"to"determine"if"it" uniquely"affects"value"and"if"so,"how"much."
"
Q.&&Why&was&there&no&adjustment&developed&by&the®ression&model&for&each&addiAonal& garage&space?"
"
A. It"does"adjust"for"addiJonal"spaces."The"regression"equaJon"assigns"a"value"for"a"single"
" "
garage"space."If"there"are"2"spaces,"the"value"assigned"by"the"regression"equaJon"or"model" is"simply"mulJplied"Jmes"2."The"regression"weight"for"garage"space"indicates"the"amount"of" change"in"sales"price"for"each"unit"change"in"garage"space."If"there"is"1"space,"it"is"simply"the" regression"coefficient"reflecJng"dollars"to"add"to"the"sales"price"if"a"garage"space"is"present." If"there"are"2"garage"spaces,"the"adjustment"is"two"Jmes"the"value"of"1"space."If"there"are"3" garage"spaces,"the"value"is"3"Jmes"the"value"of"1"space,"and"so"on."
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