Real Estate Appraisal Forum

appraisersforum.com logo
The Premiere Online Community for Real Estate Appraisers!
 Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
 
 
Go Back   Appraisers Forum > Other Forums > Ask an Appraiser
Register Help Our Rules Calendar Archives Mark Forums Read


Closed Thread
 
Thread Tools
  #1  
Old 10-06-2011, 10:51 AM
JR417 JR417 is offline
 
Join Date: Oct 2011
State: Georgia
Professional Status: General Public
Posts: 4
Default Old House Completely Remodeled

I own a house originally built in 1900. We completely remodeled (90%) of the house back in 2005, replacing all the electrical, plumbing, sheetrock, siding, flooring, arch features, etc. The original construction loan was $200K, and was backed by the original appraisal. Since then, every appraisal we've had done is around $80K, due to falling home prices and the market. We are trying to refinance since interest rates are incredible.

The appraiser states a 1900 house has to be listed as a 1900 house. So although it's rebuilt, the house is still compared to old houses without any work done. Is it possible to have an old remolded house appraised at replacement value instead of comparables? What should we do? Hire an appraiser that specializes in old homes and give the bank appraiser a copy? At what point does an old house become a spec home (i.e. we took this to the bones and rebuilt everything except outside siding)?

Any help is greatly appreciated.
Sponsored Links

  #2  
Old 10-06-2011, 11:17 AM
Smokey Bear's Avatar
Smokey Bear Smokey Bear is offline
 
Join Date: Dec 2004
Location: The "OC" in Republican Land (Oh no!)
State: California
Professional Status: Certified Residential Appraiser
Posts: 12,470
Default

For a loan, the lender has to hire the appraiser. Hopefully they'll find one who knows the difference between actual age and effective age. In my area, sometimes even the city will list the two dates for year built - 1900/2000. Effective age is what needs to be compared, not age of the shell.
__________________
For God's sake, if you need to take legal action, GET A LAWYER. I'm not giving legal advice.
  #3  
Old 10-06-2011, 11:29 AM
residentialguy's Avatar
residentialguy residentialguy is offline
 
Join Date: Mar 2009
State: Minnesota
Professional Status: Certified Residential Appraiser
Posts: 14,172
Default

There is a new standardized format with appraisals now (called UAD) and the appraiser must list the actual age in the sales comparison grid. Don't let that alarm you. The appraiser should take into account that it has been renovated and should compare similar condition and effective age sales with it. They should explain that in the sales approach section of the additional comments. That is what you want to look for on the appraisal - that s/he indeed did that.
__________________
Due diligence doesn't mean you get all the answers...it means you've done your job!
  #4  
Old 10-06-2011, 11:31 AM
JR417 JR417 is offline
 
Join Date: Oct 2011
State: Georgia
Professional Status: General Public
Posts: 4
Default

Thanks for your comments. If I jack up the house, pour a permanent foundation, does this alter the effective age? What I want is to be able to update the 1900 year and have it listed as a brand new house, or as you commented, have two year dates listed. Any suggestions on increasing the effective age?
  #5  
Old 10-06-2011, 11:57 AM
residentialguy's Avatar
residentialguy residentialguy is offline
 
Join Date: Mar 2009
State: Minnesota
Professional Status: Certified Residential Appraiser
Posts: 14,172
Default

You need to check with the city...they determine what it takes to make it a new construction. But it will probably be incurable...meaning you will pay more to change it than what you will get back out of it.

There is nothing wrong with a renovated old home. New homes don't necessarily sell for more. Some of the most expensive homes I've appraised were built in the late 1800's and early 1900's.
__________________
Due diligence doesn't mean you get all the answers...it means you've done your job!
  #6  
Old 10-06-2011, 12:00 PM
George Hatch's Avatar
George Hatch George Hatch is offline
 
Join Date: Jan 2002
Location: Carlsbad, California
State: California
Professional Status: Certified General Appraiser
Posts: 15,796
Default

I agree that the quality and condition of the improvements is a critical issue and should be comprehensively addressed in an appraisal. I completely disagree with the idea of comparing a home with a dated design as being equal to a newer home with a more current design. Floorplans are usually different. Room sizes are usually different. Ceiling heights are often different. The core structural components are often different. Enclosed parking structures and their convenience to the interior are often different. Depending on the regional preferences even the use of siding vs a stucco or masonry finish may be of effect.

A 100-yr old home that has been completely rehabbed and remodeled still retains some obsolescence, otherwise the new homes that get built would look just like the old ones.

Appraisers have a cliche for costs: Cost does not equal value. That's how common such problems are. On a component basis rehab costs tend to run a lot higher than new construction costs. On an economic basis (only) you might have been better off demolishing the original structure and building a new one.

With all that said, fairly identifying the market's reaction to the much superior condition of all the finishes for this doubtlessly very appealing home would not be easy under any circumstances. A smart appraiser would likely have been seeking out other rehabbed properties as a means of identifying that market reaction.

How that would work would be finding the closed sales of several rehabbed properties, even if located in a different area or during a different time frame, and comparing each of them to other non-rehabbed sales close by as a means of isolating the difference in price that is attributable to the superior condition. Then we would quantify that difference - most likely as a percentage of the whole - and apply that percentage as a condition adjustment to the available direct comparable properties in the subject's neighborhood that are reasonably similar except for the condition factor.

Ideally an appraiser would search to find several rehab sales and run those comparisons with their respective proximate-but-inferior-condition sales. We would prefer to be able to find enough examples of such data so as to enable us to identify the trend rather than relying on just one or two isolated examples that may or may not be indicative of the rule as opposed to the exception to the rule.

Needless to say, such an analysis would require substantially more time and effort to complete the requisite research and analysis. And as they say, time is money. I would expect the fee to the appraiser for such an assignment to be a lot higher than normal.
  #7  
Old 10-06-2011, 02:23 PM
NorthTexValuation NorthTexValuation is offline
 
Join Date: Sep 2011
State: Texas
Professional Status: Certified Residential Appraiser
Posts: 1,095
Default

The only way to make your house a new house is to tear it down to the foundation and rebuild everything from the ground up. Pouring a concrete foundation does not accomplish that. Your house should be compared with houses of similar year built (1900) as possible with as similar remodeling as possible. The arch. style of your house is probably very dissimilar to a house built even 50 years ago and would appeal to a different buyer/market.
  #8  
Old 10-06-2011, 04:59 PM
JR417 JR417 is offline
 
Join Date: Oct 2011
State: Georgia
Professional Status: General Public
Posts: 4
Default

I appreciate all the great responses from the pros. The house has a lot of the original character remaining, with a modern update. Why are the banks using inexperienced random appraisers from a data base pool? We have more than a couple of properties, and it's becoming a racket, bank takes 3/4 of the appraisal fee, and a 1/4 goes to the appraiser, chosen at random, regardless of experience level.
  #9  
Old 10-06-2011, 09:30 PM
David Wimpelberg's Avatar
David Wimpelberg David Wimpelberg is offline
 
Join Date: Mar 2005
Location: Hamptons, NY
State: New York
Professional Status: Certified General Appraiser
Posts: 15,198
Default

With regard to the valuation of the property, a local expert should be hired. These types of homes can have more, less, or the same value as newer homes. The nuances of the particular market have to be known to determine this.

With regard to the appraiser, at your level of funding, most of the loans in GSEs (Fannie Mae, Freddie Mac, etc.). The lenders that deal with these types of loan often pass of the appraiser selection to an Appraisal Management Company (AMC). To make a long story short, they don't necessary select the most competent appraiser available, since those types of appraiser tend not to be cheap nor fast.
  #10  
Old 10-06-2011, 10:10 PM
Lee in L.A.'s Avatar
Lee in L.A. Lee in L.A. is offline
 
Join Date: Jan 2002
Location: Los Angeles / Reseda, CA
State: California
Professional Status: Certified Residential Appraiser
Posts: 7,880
Default

Quote:
Originally Posted by JR417 View Post
I appreciate all the great responses from the pros. The house has a lot of the original character remaining, with a modern update. Why are the banks using inexperienced random appraisers from a data base pool? We have more than a couple of properties, and it's becoming a racket, bank takes 3/4 of the appraisal fee, and a 1/4 goes to the appraiser, chosen at random, regardless of experience level.
You aks good questions for a GP member.

The best comps would be similar old remodeled homes just like yours. If such exists. If they don't exist, that's when you start searching for dated, distant, and dissimilar comps. Life is much easier with good comps.

As for the banks, they get what they pay for (cheap junk!) in that senario.
__________________
Reach out your hand, if your cup is empty.
if your cup is full, may it be again.
Sponsored Links

Closed Thread


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump




Copyright © 2000-, AppraisersForum.com, All Rights Reserved
     Terms of Use  Privacy Policy
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com

Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
Partner Sites:
AppraiserUSA.com - National Appraiser Directory AllDomainsUSA.com - Domain Name Registration
DeadbeatListings.com - Deadbeat ListingsAppraiserSites.com - Web Hosting for the Professional Real Estate Appraiser
Find FHA Appraisers - FHA Appraiser Search Commercial Appraisers - Commercial Appraiser Search
Relocation Appraisal - Find Relocation Appraisers Domain Reseller - Business Opportunity
Home Security Buzz - Home Security Info Radon Testing - Radon Gas Info
My Medicare Forum - Medicare Info Stop Smoking Help - Help Quitting Smoking
CordlessPhoneStore.com - Great Cordless Phones AndroidTabletCity.com - Android Tablet Computers

Follow AppraisersForum.com:          Find us on Facebook            Follow us on Twitter


All times are GMT -5. The time now is 01:31 AM.

SiteMap: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93