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  #1  
Old 10-05-2011, 09:48 PM
Wayne Henry's Avatar
Wayne Henry Wayne Henry is offline
 
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Default When to use contributory value

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 itís 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.
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Old 10-05-2011, 10:14 PM
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Calvin the Airedale Calvin the Airedale is offline
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Quote:
Originally Posted by Wayne Henry View Post
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.
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."
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  #3  
Old 10-05-2011, 10:50 PM
leelansford leelansford is offline
 
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Quote:
Originally Posted by Wayne Henry View Post
...

What would you do, please genuine assistance and no smart remarks would be greatly appreciated.
...

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!
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  #4  
Old 10-05-2011, 11:06 PM
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Terrel L. Shields Terrel L. Shields is offline
 
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Default

Quote:
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.
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.

Quote:
"Certain items represent such a small part of the property value, and coupled with the paucity of sales data for similar features, it is statistically impossible, either by paired sales, sensitivity analysis(bracketing), or multiple linear regression to isolate a value for specific ancillary feature of the dwelling, such as a fireplace, granite cabinets, decks and porches, etc. However, these features may be reflected in the comparative quality level of the home. It is solely the judgment of the appraiser that any adjustment is made for such items."
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  #5  
Old 10-06-2011, 07:46 AM
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Mike Garrett, RAA Mike Garrett, RAA is offline
 
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Sounds like you might have given the deck or balcony an unusually high contributory value. Comments should solve the issue.
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  #6  
Old 10-06-2011, 08:28 AM
Denis DeSaix Denis DeSaix is offline
 
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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  
Old 10-06-2011, 10:37 AM
Thomas Fiehler Thomas Fiehler is online now
 
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"Summary Appraisal Report" .....Really!!!!!!!!
  #8  
Old 10-06-2011, 06:42 PM
NorthTexValuation NorthTexValuation is offline
 
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Default

Quote:
Originally Posted by Wayne Henry View Post
Should I put sales that are not comparable in the report to bracket the amenities .
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  
Old 10-06-2011, 07:02 PM
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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.
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  #10  
Old 10-06-2011, 07:28 PM
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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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