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  #1  
Old 09-22-2011, 12:19 PM
TrioAppraisals Group TrioAppraisals Group is offline
 
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Default GLA v. Garage Space

I received a phone call this morning from a client requesting a change on a report completed a few weeks ago. The request came from an employee with the title Senior Appraisal Consultant however after speaking with her I don't think she is a licensed appraiser.


A little info on the home


The home is in a high-end gated community in Huntington Beach and was just purchased last year.

The property has an attached two car garage and another attached single car garage. The single car garage was converted to additional living space (used as an office) by the previous owner without permits.

The converted garage has been drywalled and carpeted but the garage door is still in place. The ductwork from the house has not been extended into the garage so there is no heating for this room.

In the appraisal I gave no credit to the 1 car garage for garage space due to being used as an office (not functional garage space in it's current use) and also gave no credit to it for living area due to the conversion being completed without permits and not being heated (I was always told that if living space did not have a heating source it could not be considered livable area).

I gave no credit to the area at all due to having an unpermitted conversion but did state that it could be reconverted to a fully functional garage at a minimal cost by removing the drywall and replacing the garage door opener.

Here is what the lender is asking me to do

The lender stated that per their guidelines I am to count the converted garage area in the total GLA even though they are aware it was not permitted.

I see an issue with this because the added value as a garage and as living area would be quite different in terms of their contributory value

If I counted it as garage space all the comps with a 3 car garage would be considered similar and have the adjustment removed

However, if credited as GLA per the lender request the adjustment for the additional 200 sf would significantly increase the adjusted value of every comp and in my opinion give more value to the garage than I think it is worth.

Also, the lender has asked that I change the effective date so that I don't have two copies of the same report with the same date floating around. I flat out said this is not possible. The effective date must stay the same but the signature date would change showing a revision was made to the original report.

Just wondering but has anyone ever had this type of request from a client, and also, is this allowable? It seems to me like they are trying to find a way to increase the value of the appraisal.

FWIW, the final estimate of value was slightly below what was paid for the property last year and my statistical data appears to justify the decline.

Please let me know any thoughts on how I should approach this or any other questions I should ask the client.
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  #2  
Old 09-22-2011, 12:26 PM
residentialguy's Avatar
residentialguy residentialguy is offline
 
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You can count it toward GLA and deduct (adjust) any aversion to that area because it has no contributive value in the market place, if the market does not place any value in it, due to it being illegal.

You need to see if it is legal for the zoning. Don't checked legal or grandfathered if it is not.
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  #3  
Old 09-22-2011, 01:00 PM
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Peter LeQuire Peter LeQuire is offline
 
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Default

Quote:
Originally Posted by TrioAppraisals Group View Post
I received a phone call this morning from a client requesting a change on a report completed a few weeks ago. The request came from an employee with the title Senior Appraisal Consultant however after speaking with her I don't think she is a licensed appraiser.


A little info on the home


The home is in a high-end gated community in Huntington Beach and was just purchased last year.

The property has an attached two car garage and another attached single car garage. The single car garage was converted to additional living space (used as an office) by the previous owner without permits.

The converted garage has been drywalled and carpeted but the garage door is still in place. The ductwork from the house has not been extended into the garage so there is no heating for this room.

In the appraisal I gave no credit to the 1 car garage for garage space due to being used as an office (not functional garage space in it's current use) and also gave no credit to it for living area due to the conversion being completed without permits and not being heated (I was always told that if living space did not have a heating source it could not be considered livable area).

I gave no credit to the area at all due to having an unpermitted conversion but did state that it could be reconverted to a fully functional garage at a minimal cost by removing the drywall and replacing the garage door opener.

Here is what the lender is asking me to do

The lender stated that per their guidelines I am to count the converted garage area in the total GLA even though they are aware it was not permitted.

I see an issue with this because the added value as a garage and as living area would be quite different in terms of their contributory value

If I counted it as garage space all the comps with a 3 car garage would be considered similar and have the adjustment removed

However, if credited as GLA per the lender request the adjustment for the additional 200 sf would significantly increase the adjusted value of every comp and in my opinion give more value to the garage than I think it is worth.

Also, the lender has asked that I change the effective date so that I don't have two copies of the same report with the same date floating around. I flat out said this is not possible. The effective date must stay the same but the signature date would change showing a revision was made to the original report.

Just wondering but has anyone ever had this type of request from a client, and also, is this allowable? It seems to me like they are trying to find a way to increase the value of the appraisal.

FWIW, the final estimate of value was slightly below what was paid for the property last year and my statistical data appears to justify the decline.

Please let me know any thoughts on how I should approach this or any other questions I should ask the client.
Ask the client why they are trying to coerce you to hit the number they want.

I'm guessing that the 1 car garage was permitted at the time it was built, and that it is the fact that the present owner is using it as an office that is the concern.

The room isn't ducted to the HVAC system; it has a garage door. It also has carpet - so what. It sounds to me like you have a carpeted garage - great for storing one's restored Aston Martin DB5. Any negative market perception that might attach would appear to be the hassle of removing the carpet. The fact is that that space sounds like a garage, not living area.

Unless you have reason to reinspect the property, (surely the circumstances aren't so weird as to require the owner to remove the carpet and have you reinspect it?) under no circumstance or amount of wheedling or threats, veiled or otherwise, should the effective date of the appraisal be changed.
(There are many threads in this forum about how to treat requests for changes to reports.)
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Last edited by Peter LeQuire : 09-23-2011 at 08:11 AM.
  #4  
Old 09-22-2011, 01:05 PM
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Smokey Bear Smokey Bear is offline
 
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What would it be if the owner moved out all personal property? Sounds to me like it's still a garage, with a cost to cure. It hasn't been fully converted to GLA, so it's not GLA, with or without permits, but it's space. You have to count it somewhere if it's not a safety issue going in there.
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  #5  
Old 09-22-2011, 01:14 PM
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CANative CANative is offline
 
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Didn't give it credit? What does that even mean?

It's a property improvement. An amenity. Even if you can't find ideal comparable sales it seems to me that this amenity would command a higher price with this amenity than without it.

I think you erred (IMO.) A third garage bay should at least get $2,500.
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  #6  
Old 09-22-2011, 01:19 PM
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and on the first day God said let there be light. I gave credit, I gave no credit,,, You don't give anything, you report what the market reaction would be.
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  #7  
Old 09-22-2011, 01:22 PM
TrioAppraisals Group TrioAppraisals Group is offline
 
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Quote:
Originally Posted by Peter LeQuire, IFA View Post
Ask the client why they are trying to coerce you to hit the number they want.

I'm guessing that the 1 car garage was permitted at the time it was built, and that it is the fact that the present owner is using it as an office that is the concern.

The room isn't ducted to the HVAC system; it has a garage door. It also has carpet - so what. It sounds to me like you have a carpeted garage - great for storing one's restored Aston Martin DB5. Any negative market perception that might attach would appear to be the hassle of removing the carpet. The fact is that that space sounds like a garage, not living area.

Unless you have reason to reinspect the property, (surely the circumstances aren't so weird as to require the owner to remove the carpet and have you reinspect it?) under no circumstance or amount of wheedling or threats, veiled or otherwise, should the effective date of the appraisal be changed.
(There are many threads in this forum about how to treat requests for changes to reports.)

Just wondering but would your feelings about the conversion be the same if the garage had been connected to the HVAC system? permits or not?

I may have been a bit unclear regarding the garage door. The door is in place, meaning if you were viewing the garage from the outside you would be looking at a sectional garage door, however from inside the garage the overhead mechanism has been removed and the garage door is not visible due to a drywall partition.
  #8  
Old 09-22-2011, 01:23 PM
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Scott R Marshall Scott R Marshall is offline
 
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Your methodology seems a bit faulty. Rather than saying "Well it has no value because it's neither a garage nor is it heated space" what you should have done is determine a cost to cure to make it one or the other. Based on your statement that it is unpermitted, it would probably have made more sense to figure out what it would cost to "convert" it back to a garage. How expensive is it to remove drywall and carpet? Take that number and subtract it from the contributory value of a third car space. What's left is a better judgement as to whether or not it has any contributory value.
  #9  
Old 09-22-2011, 01:27 PM
TrioAppraisals Group TrioAppraisals Group is offline
 
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Quote:
Originally Posted by CANative View Post
Didn't give it credit? What does that even mean?

It's a property improvement. An amenity. Even if you can't find ideal comparable sales it seems to me that this amenity would command a higher price with this amenity than without it.

I think you erred (IMO.) A third garage bay should at least get $2,500.

I appreciate the info. I agree I think I erred and should have given some monetary credit to the garage regardless of it's current use.

Should I inform the client I made an oversight and I need to revise the report giving credit to the garage space
  #10  
Old 09-22-2011, 01:32 PM
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residentialguy residentialguy is offline
 
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Quote:
Originally Posted by CANative View Post
Didn't give it credit? What does that even mean?
You put an adjustment on the grid (you give it credit) based upon the market reaction (contributory value) to the garage/office being there. That's how I took it.
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