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How Does Bracketing Influence Appraisal Values
November 12th, 2019 12:41 PM

If you are a Realtor, investor, buyer, or seller you may be asking yourself, what is “bracketing”? When developing a sales comparison analysis, “bracketing” refers to selecting comparable properties with features that are inferior, similar, and superior to the subject’s features. Most lenders require that appraiser’s “bracket” the comparables included in the appraisal analysis. Realtors are encouraged to bracket their comparables when developing their Comparative Market Analysis’ (CMA). Features in an appraisal or CMA that are bracketed may include, living area, amenities (i.e. pools and garages), updates, condition, lot size, view and location, just to name a few.

Most lenders require that the appraiser “bracket” the market value in an appraisal. Meaning, that the opinion of market value stated in the appraisal must be “bracketed” by the sales prices and the adjusted sales prices of the comparables.

For example, if an opinion of market value stated in an appraisal is $300,000, then the appraiser should include comparables with sales prices that are below, similar to, and above the market value stated in the appraisal, which means that the comparables sales prices should range below, similar to, or above $300,000 value.


Sales Prices




Adjusted Sales Prices





The sales prices of the three comparable sales listed above are $321,000, $315,000, and $282,000. Additionally, their adjusted sales prices are $300,500, $301,000, and $302,600.

In this example one can see that the market value of $300,000 is indeed “bracketed” by the sales prices of the comparables which range from $282,000 to $321,000. Also, the market value of the $300,000 is “bracketed” by the adjusted sales prices of the comparables which range from $300,500 to $302,600.

To summarize, the opinion of market value should fall or be “bracketed” within the price range of the comparables. Contrary to popular belief, appraisers do not “average” the adjusted sales prices of the comparables. Appraisers use a weighted sales reconciliation method.

Another example is appraisers’ “bracket” the living areas of the comparable sales. If the subject is 2,000sqft, then an appraiser may include a comparable with square footage that is smaller than the subject, perhaps 1,800sqft, square footage that is similar to the subject, perhaps 2,100sfqt, and square footage that is larger than the subject, perhaps 2,300sqft.

Another item that appraisers’ “bracket” is the lot size of the subject. The appraiser may include a comparable with a smaller parcel size, a similar parcel size, and a larger parcel size than the subject. Ideally the comparables lot sizes would be smaller, similar, and larger than the subjects lot size. Always keep in mind that “comparable” homes must be utilized. In other words, a comparable is what a prospective buyer of a subject property would consider when looking at similar homes.

As we already learned, “bracketing” is not required; however, most lenders require that the appraiser use this technique in their appraisal reports. This ensures that the appraiser is providing a fair valuation analysis by selecting comparables that “bracket” the subject. My advice to the rest of the real estate community is, try implementing this on your next CMA and see how much closer your analysis is to the appraised value.




By: Kelly Kellogg, The Appraisal Expert!

Appraisal Experts, Inc. Cert Res RD2727



Posted by Kelly Kellogg on November 12th, 2019 12:41 PMPost a Comment

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