Glossary

Gross and Net Adjustment Percentage

Also known as: Net Adjustment Percentage, Gross Adjustment Percentage

Quality-control metrics calculated for each comparable in an adjustment grid — net adjustment percentage sums all adjustments algebraically, with positive and negative offsetting, as a percentage of the comparable's sale price, while gross adjustment percentage sums the absolute value of every individual adjustment regardless of sign — used to flag comparables that required unusually heavy adjustment to reach the subject.

The two metrics measure different things and both matter: a comparable can show a low net adjustment percentage while its individual line-item adjustments largely offset each other, a high gross adjustment, which is actually a weaker comparable — one requiring substantial correction on multiple dimensions that happened to net out — than a comparable with both low net and low gross adjustments, which more directly resembles the subject with little correction of any kind required. Secondary mortgage market and appraisal review guidelines, originally developed in the residential context but widely adopted as informal benchmarks in commercial review as well, commonly flag comparables whose gross adjustments exceed roughly 25% and net adjustments exceed roughly 15% of sale price as warranting additional explanation, though no fixed threshold is a USPAP requirement and reasonable commercial adjustments can properly exceed these informal benchmarks in thin or unusual markets provided they are well supported. Consistently high gross adjustment percentages across most comparables in a grid usually indicate a shortage of genuinely comparable market data in the subject's specific submarket or property subtype, which is itself useful diagnostic information for a reviewer assessing how much weight the sales comparison approach should carry in the appraisal's final reconciliation.