Discussion in 'General Appraisal Discussion' started by Michigan CG, Jul 6, 2011.
Wouldn't year built be an important factor in the analysis?
I read the article and the comments.
The lack of a second bath in a $500K house creates a serious functional problem and the adjustment should be based on obsolescence, not merely the lack of a few fixtures.
Not saying his numbers are wrong but he is oversimplfying the situation by calling it a bathroom adjustment.
I'd have to know the area and homes to really know, but based on what I have see in price differences among similar sf houses where one house is a bit larger and has one amenity difference such as a bath, I've never seen the price difference of such a large amount be due to a bath alone. Usually the bigger house has a different floorplan, or higher cielings, larger lot, etc. Because if the only difference is one bathroom, and an additional bath can be installed for perhaps 15k, hard to believe a buyer would pay 60k more just for a bath...usually there are other features and advantages of the larger house such as a better room flow and floorplan, where all the rooms are bigger, more closet space, diff lot lines or section in community, etc. But I don't know the area so it is possible .
This is a problem where gross figures are used and only one item is analyzed. Condition, finish, amenities, updates, etc do not appear to be adequately considered in this analysis. As such, while the appraiser attempted to do a regression analysis, the results do not appear to be supportable.
If an appraiser has 882 sales, I'd think he'd use two bathroom houses to compare with
two bathroom houses and not worry about the adjustment. I'm not saying his analysis
is flawed, but using that much data to isolate one variable I think is questionable, but
its the kind of thing AVMs come up with. If you can compare apples with apples,
don't include oranges.
I haven't either (around here the difference is more typically 2% per full bath, regardless of location if there is at least one half bath per floor), but then again the bath count difference around here in most $500,000 homes is between 2.5, 3, & or 3, 3.5 & 4 rather than between 1 & 2, but old (100+ years) city markets are a much different than newer, more suburban markets. I recently visited a friend in Evanston and I made the comment to him that the location where his main floor half bath was located likely was the pantry or such when the house was 1st built and that in some of the upscale homes I had been in they had two separate "water closets" the size of his half bath off the master bath, one for each of a "his & hers" toilet. In such an environment where a market can exist where all the homes are 100+ years old, yet are "more upscale" in price like the article seemed to indicate I can well see an additional bath being valued at 10%+ by the local market due to the scarcity and difficulty in adding additional baths ("let us see, either we have to fully develop the basement and add a bathroom there or lose one of the bedrooms ..." I am not joking as I know of a number of farm houses that literally turned an upstairs bedroom into a full bath).
Most of Florida is new. Florida may have some of the oldest buildings in the US (a fort & such IIRC) and the most northern parts have been continually inhabited since colonial times, but it is mostly much further north along the east coast of the US where you find the highest percentage of 100+ year old neighborhoods. We have a number of 80+ and 100+ NBHDs in Kenosha, Racine & Milwaukee but they tend to be much smaller than in areas longer settled. Chicago's oldest NBHDs are slightly newer than Racine, Kenosha's & Milwaukee's oldest NBHDs but tend to be more homogenous due to the Great Chicago Fire, but as that was 1871 it was still before indoor plumbing started to become more standard (starting just after1906 and pretty much the standard in cities sometime during/after the 1920's AFAICT).
So, function obsolescence and relative function obsolescence for the area could well create much higher adjustments in one market compared to another.
The analysis seems to be mostly smoke and mirrors designed to prove a point. He sorted based on age, design and bathroom count assuming that all other variables would be the same. I would be curious to know how many of those homes had garages, basements, pools, or other amenties that differed from the norm? Simply adding a garage to half of the comparables could make a stunning difference. There also appears to be no allowance for effective age. I suppose it is possible that all 50,000 homes aged at the same rate and had the same maintenance/upgrades over the years, but in the areas I am familiar with this is rarely the case.
The point being that appraisers should actually THINK about and try to research adjustments rather than just use standards such as $1000 per "half" bath?
I think that the article brings that point up quite well, and calls to attention that the neighborhood and type of houses (including what typical layouts were and what the actual cost & value of adding a second bathroom actually is not only in regards to physical cost, but in regards to loss of a bedroom or such.
If THAT was his point, then I think it has been well made based on this discussion. If he was trying to advocate adjustments across the board at or in excess of costs then I would think he was so far out in left field that he ought to watch out for combines. :blush:
These should wash IF (and only if) he was processing mass statistical data correctly. The main point I see that you made is that effective age in when last remodeled could affect the probability of addition bathroom(s).