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When to use contributory value

Discussion in 'Urgent - Help Needed' started by Wayne Henry, Oct 5, 2011.

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  1. Wayne Henry

    Wayne Henry Junior Member

    1
    Nov 17, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Maryland
    I have a property that is in a very stable market area with a low turn around rate. The property has a balcony and deck which is not bracketed by any of the 6 sales I used. The underwriter wants me to expand my search and time which I did and still cannot bracket the amenities. I never had a request to bracket the amenities before so this did catch me off guard; then again I do not think I ever had an issue finding sales with decks and balconies in areas I appraised. Should I put sales that are not comparable in the report to bracket the amenities or simply calculate a contributory value for the amenities which are not typical in this market from my data? I do believe you can extract as an appraiser from the market what a typical buyer would pay for the difference... isn't our opinion what they pay for?

    What would you do, please genuine assistance and no smart remarks would be greatly appreciated. There seems to be a lot of that on these forums and it’s a shame because if you have knowledge you should be able to share it without belittling or making the questioner feel bad which I saw a lot of in previous messages on this forum.
     
  2. Calvin the Airedale

    Calvin the Airedale Elite Member
    Gold Supporting Member

    0
    Aug 17, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Ohio
    Revise the report to include language that you attempted to bracket for all adjustment categories but were limited by the lack of sales.

    Explain that to present sales that are not truly comparable either by virtue of other differences in either proximity or date (market conditions) might be misleading to a reader and therefore a USPAP violation.

    In addition, explain that items such as balconies and decks are secondary amenities. Few deals hinge on their presence or absence and certainly none which have been presented as the foundation of this analysis.

    Lastly, include the following statement:

    "Given the price declines and the lack of buyer demand over the past few years, this valuation must be termed a complex residential analysis in conformance with CFR definitions for such work, to wit: "CFR, Title 12, Part 34, (e) Complex 1-to-4 family residential property appraisal means one in which the property to be appraised, the form of ownership, or market conditions are atypical." (Emphasis added.) As a complex valuation, any compliance with FNMA line item, net & gross adjustment guidelines, or bracketing targets are purely coincidental."
     
  3. leelansford

    leelansford Elite Member

    24
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois

    Balcony and a deck? And these two items are significant to the valuation of the subject? Hard to believe.

    If I rightfully concluded that my appraisal included the most reasonable data available, I would respond to the request by stating that the market did not provide what the requestor is asking of me.

    Next!
     
  4. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    133
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    My logic is that unless an item is significant enough in the market that its value (even say it's cost) is larger than the statistically significant deviation...it's invisible and although it might be possible to isolate its value under some unique situation...it's still too variable to be a valid "adjustment". I find fireplaces to be similar. The fireplace may be a typical item in a home that is A - higher quality , or B - was built in the mid to late 70s when cold winters gave a market positive to having a "supplemental" heat source to reduce heating bills. The warmer 90s saw the marginalization of fireplaces. I would be more wood stoves and pellet stoves have been retrofitted or installed in homes in the past 2 years in the midwest than the previous 5 years.

    With the incredibly limited number of sales most of us are having available to us, it is even less likely we can isolate such items in a statistically significant way. That would be my argument to the UW.

     
  5. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    9
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Sounds like you might have given the deck or balcony an unusually high contributory value. Comments should solve the issue.
     
  6. Denis DeSaix

    Denis DeSaix Elite Member

    55
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    I don't fully understand how this developed into a UW condition?

    Was it
    (a) the appraisal adjusted for these items in the grid, making an "across the board" adjustment (I would presume, upward), or
    (b) the UW, upon reviewing the physical features of the subject, determined that there should be an adjustment (or demonstration of value-neutrality) and therefore required additional comparables to "bracket" the item?
     
  7. Thomas Fiehler

    Thomas Fiehler Senior Member

    2
    Jun 2, 2003
    Professional Status:
    Certified General Appraiser
    State:
    Ohio
    "Summary Appraisal Report" .....Really!!!!!!!!
     
  8. NorthTexValuation

    NorthTexValuation Senior Member

    0
    Sep 17, 2011
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    Never.

    Add some verbiage regarding lack of comps with these amenties and how you estimated contributory value.

    If the adjustment was something like $20,000 on a $200,000 property, that will be a problem.
     
  9. PropertyEconomics

    PropertyEconomics Elite Member

    0
    Jun 19, 2007
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico
    When measuring contributory value I believe one has to be very careful as to how the determination is made. I have typically found that measurement on a total dollar basis is less reliable and supportive than measuring on a contributory value per square foot or some similar measure.

    I have done this on decks, sunrooms, guesthouses, etc and it seems to be easier to explain and justify rather than merely measuring, as I said, on a total dollar basis.
     
  10. CANative

    CANative Elite Member

    60
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    People have decks so someone had to have paid for these decks. Trying to find perfect comps just to extract a deck adjustment is silly. Used depreciated cost.
     
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