Which of the following best describes documenting adjustments when making adjustments for location or physical characteristics?

• A. Keep adjustments confidential and not documented.
• B. Apply adjustments only to improve appearance of value.
• C. Document the rationale and data supporting each adjustment, ensuring consistency with market data.
• D. Use adjustments based on convenience.

Answer: (C)

When adjusting for location or physical characteristics, you must document the rationale and the data that support each adjustment and show that the adjustments align with observed market transactions. This means clearly stating why a difference exists (for example, how a better neighborhood, closer amenities, or a superior view affects value), and tying that adjustment to market evidence—such as comparable sales, price differentials seen in similar properties, or market participants’ typical adjustments. The goal is transparency and defensibility: anyone reviewing the appraisal should see exactly what was adjusted, how much the adjustment was, and why, with data to back it up.

This is superior to keeping adjustments confidential or undocumented, which undermines credibility and the ability to defend the value. It’s also better than adjusting merely to improve appearance of value or based on convenience, which can misrepresent true market impact.