What is Bracketing?

An important concept in appraising is the process of bracketing. So, what is bracketing? One of the main ways that an appraiser supports a value estimate, is by pulling comparables. When pulling comparables, it is important to find homes that have superior and inferior features compared to the subject.

As an example, if the subject has 1,000 square feet, there should be a comparable that is larger and a comparable that is smaller. If you have one comparable with 800 square feet and another with 1200 square feet with a sale price difference of $40,000, you can tell that $100 per square foot was paid for the extra 400 square feet.

This is clearly a simplified example, ignoring all of the additional complexities that non homogeneous commodities include. If the subject also has solar panels, a pool, and a detached 4 car garage, it would be important to bracket each of these features as well.

The more complex a subject property, the more complex the analysis will be because more comps will be needed to bracket all the subject's important features. A major purpose of bracketing is to prevent skewing and to provide support for adjustments. When done right, bracketing can be a powerful tool in the valuation process.

- Jordan Jorgensen

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