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PLEASE Help! Part of house is missing!
- Thread starter GjJetson
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This has morphed into a bizarre situation.
First let me say that I very much appreciate all of the answers you provided. While I did not get the answer I wanted, everyone certainly gave answers with well reasoned arguments.
After an extensive search yesterday my sister and I came across the complete appraisal documents from the last re-fi that was done just after her husband unexpectedly passed away. I wish I had been living in this area (Nashville, Tennessee) at that time so I could have helped her with financial and other issues. But unfortunately I was not.
Anyway, that appraiser made a major mistake. He calculated around 300 extra square feet in the "main" section of house by adding 14 feet to the width of the house. I.e. it is actually 60 feet wide as the current appraiser shows, but the previous appraiser had the width as 74 feet. Another strange thing is that the local tax authority also added extra footage to the width. But they only added an extra 10 feet and therefore show a width of 70 feet. Two different people making the same mistake? It is just a coincidence that the extra width adds up to almost the same footage as adding in the workshop area. That is why I thought that this area had previously been included in the living space.
So my sister finds herself to have been paying taxes on 1708 square feet for years instead of 1451. And the value of her property has been calculated using this extra footage for at least 10 years, (that I can document) and maybe even longer.
Now, just when she has need for the property to be recognized at the "expected" value, the appraisal comes in 30k below tax value, close to 30k below the last re-fi, and about 45-65k below what 1700 square foot comps are showing.
I have been racking my brain on how to resolve this issue and help her out. I have come up with a couple of possible solutions and I would very much appreciate some advice from the experts on this forum before proceeding.
What I am really looking for here is the possible effects on a re-appraisal.
Both of the following solutions require
1. cutting a new door into the existing workshop wall facing the main house so that access can be made without going outside
2. dry-walling the inside of the existing room
3. reinstalling the carpet I removed
4. reinstalling a window unit for heat/air (very popular in this area)
As shown in the diagram and images from the first post, there is a carport/parking area between the house and the workshop, which is the main reason the workshop area isn't included in the living space if I understand correctly. Here are a couple of close-up photos made with my phone yesterday that may help envision what I am suggesting.
Standing on the deck looking right:
http://img687.imageshack.us/img687/9571/image135o.jpg
Then left:
http://img716.imageshack.us/img716/3884/image1362.jpg
The first solution is to enclose the carport area with screened walls to make a screened in breezeway. Obviously the fastest and cheapest solution.
The second solution is to enclose the area making another complete room. I have a good friend who is a trim carpenter and framer and I can do the painting and carpet work myself. Only two walls would be necessary and we should be able to have that completely finished in a week or less. In fact, the house next door has the same floor plan and has had this very thing done except that they expanded the area into a single room as opposed to two as I am suggesting.
Please let me know what you think of these two solutions to our problem and how they “could” affect another appraisal.
Thanks again for your advice...George
First let me say that I very much appreciate all of the answers you provided. While I did not get the answer I wanted, everyone certainly gave answers with well reasoned arguments.
After an extensive search yesterday my sister and I came across the complete appraisal documents from the last re-fi that was done just after her husband unexpectedly passed away. I wish I had been living in this area (Nashville, Tennessee) at that time so I could have helped her with financial and other issues. But unfortunately I was not.
Anyway, that appraiser made a major mistake. He calculated around 300 extra square feet in the "main" section of house by adding 14 feet to the width of the house. I.e. it is actually 60 feet wide as the current appraiser shows, but the previous appraiser had the width as 74 feet. Another strange thing is that the local tax authority also added extra footage to the width. But they only added an extra 10 feet and therefore show a width of 70 feet. Two different people making the same mistake? It is just a coincidence that the extra width adds up to almost the same footage as adding in the workshop area. That is why I thought that this area had previously been included in the living space.
So my sister finds herself to have been paying taxes on 1708 square feet for years instead of 1451. And the value of her property has been calculated using this extra footage for at least 10 years, (that I can document) and maybe even longer.
Now, just when she has need for the property to be recognized at the "expected" value, the appraisal comes in 30k below tax value, close to 30k below the last re-fi, and about 45-65k below what 1700 square foot comps are showing.
I have been racking my brain on how to resolve this issue and help her out. I have come up with a couple of possible solutions and I would very much appreciate some advice from the experts on this forum before proceeding.
What I am really looking for here is the possible effects on a re-appraisal.
Both of the following solutions require
1. cutting a new door into the existing workshop wall facing the main house so that access can be made without going outside
2. dry-walling the inside of the existing room
3. reinstalling the carpet I removed
4. reinstalling a window unit for heat/air (very popular in this area)
As shown in the diagram and images from the first post, there is a carport/parking area between the house and the workshop, which is the main reason the workshop area isn't included in the living space if I understand correctly. Here are a couple of close-up photos made with my phone yesterday that may help envision what I am suggesting.
Standing on the deck looking right:
http://img687.imageshack.us/img687/9571/image135o.jpg
Then left:
http://img716.imageshack.us/img716/3884/image1362.jpg
The first solution is to enclose the carport area with screened walls to make a screened in breezeway. Obviously the fastest and cheapest solution.
The second solution is to enclose the area making another complete room. I have a good friend who is a trim carpenter and framer and I can do the painting and carpet work myself. Only two walls would be necessary and we should be able to have that completely finished in a week or less. In fact, the house next door has the same floor plan and has had this very thing done except that they expanded the area into a single room as opposed to two as I am suggesting.
Please let me know what you think of these two solutions to our problem and how they “could” affect another appraisal.
Thanks again for your advice...George
residentialguy
Elite Member
- Joined
- Mar 24, 2009
- Professional Status
- Certified Residential Appraiser
- State
- Minnesota
Having a mickey mouse version of additional finished sq ft does not make worth more, unless the market will pay more for it. People don't want to put on their shoes so they can walk through a muddy carport to go to another part of the "GLA"
Call it what it is - a workshop. Giving it value as GLA won't give you more value. You can't double dip and call it a workshop or sunroom and then give it credit for GLA.
Call it what it is - a workshop. Giving it value as GLA won't give you more value. You can't double dip and call it a workshop or sunroom and then give it credit for GLA.
Donald in MA
Freshman Member
- Joined
- Feb 19, 2010
- Professional Status
- Certified General Appraiser
- State
- Massachusetts
Per FHLMC and FNMA regulations
Every aspect of the house should be mentioned and included, interior inspections of course.
Storage areas, generally not heated and/or not living area, might be treated like a storage shed. They are not living area, but likely add some (even if just a small amount) of value. Same would be true for a workshop...it is there and contributes something. If there is a "component" of the house that is present, but does not contribute value, appraiser might say then that it was becasue it was in poor condition; it still must be mentioned in the report and reason given why (ex. poor condition) no value is given to this. We are required to account for all elements of the improvement (house for layman), but before too man homeowners start going off the deep end, no..we are not going to list your programable thermostate and give you the hundred bucks you paid for it. Always remember...cost is what you pay, value is what it is worth. The"worth" of amenities will be from the market...or what a "typically" buyer is generally willing to pay for something. Appraisers call this "abstracting".
Anyway, the GLA (or living area) of the house did not change, but a feature changed,,,again much like adding a shed. Sorry to say, it appears that the appraiser was correct in not including this storage/workshop into the living area. A heating unit in the window will not help either...unless it is built in, it is personal property. I know you mentioned that you could easily put carpet back in, but you could also build en entire 2nd story (presumed heated and finished). Unless it is a construction loan and we are appraising based upon plans and specs, it is correct to appraise what we see at the time we see.
Your best avenue here if you feel the house might be worth more, is to secure SALES of (maybe 2-4 of them) RANCH style homes in the NEIGHBORHOOD with 1400 +/- Sq. Ft. that sold in the last 6 months (they must be indicitive of current economic times), and see if perhaps the appraiser (via the bank?) might reconsider, if he/she feels that they are indeed good comparables. I have been doing this over 30 years, and I never mind taking a 2nd look...but too often what I am presented with is not comparable. (don't give them colonials!) Lots of good info on net, or consult another appraiser or a broker. Good luck. Don in MA
Every aspect of the house should be mentioned and included, interior inspections of course.
Storage areas, generally not heated and/or not living area, might be treated like a storage shed. They are not living area, but likely add some (even if just a small amount) of value. Same would be true for a workshop...it is there and contributes something. If there is a "component" of the house that is present, but does not contribute value, appraiser might say then that it was becasue it was in poor condition; it still must be mentioned in the report and reason given why (ex. poor condition) no value is given to this. We are required to account for all elements of the improvement (house for layman), but before too man homeowners start going off the deep end, no..we are not going to list your programable thermostate and give you the hundred bucks you paid for it. Always remember...cost is what you pay, value is what it is worth. The"worth" of amenities will be from the market...or what a "typically" buyer is generally willing to pay for something. Appraisers call this "abstracting".
Anyway, the GLA (or living area) of the house did not change, but a feature changed,,,again much like adding a shed. Sorry to say, it appears that the appraiser was correct in not including this storage/workshop into the living area. A heating unit in the window will not help either...unless it is built in, it is personal property. I know you mentioned that you could easily put carpet back in, but you could also build en entire 2nd story (presumed heated and finished). Unless it is a construction loan and we are appraising based upon plans and specs, it is correct to appraise what we see at the time we see.
Your best avenue here if you feel the house might be worth more, is to secure SALES of (maybe 2-4 of them) RANCH style homes in the NEIGHBORHOOD with 1400 +/- Sq. Ft. that sold in the last 6 months (they must be indicitive of current economic times), and see if perhaps the appraiser (via the bank?) might reconsider, if he/she feels that they are indeed good comparables. I have been doing this over 30 years, and I never mind taking a 2nd look...but too often what I am presented with is not comparable. (don't give them colonials!) Lots of good info on net, or consult another appraiser or a broker. Good luck. Don in MA
Mountain Man
Elite Member
- Joined
- Jan 15, 2002
- Professional Status
- Certified General Appraiser
- State
- Georgia
The appraiser did it correctly, and a buyer wouldn't consider it living area either.
1. unfinished.
2. not attached.
3. not like kind finishes.
4. no climate control.
5. obviously was an addition off a carport with limited utility.
1. unfinished.
2. not attached.
3. not like kind finishes.
4. no climate control.
5. obviously was an addition off a carport with limited utility.
As I mentioned in my follow-up post I agree wholeheartedly with most everything you stated. I'm past worrying about the house in it's present condition. I'm more interested in how to remodel the house to a state similar to the house next door which appraises for 55k more.
As I stated in: http://appraisersforum.com/showpost.php?p=1946469&postcount=12
"The second solution is to enclose the area making another complete room. I have a good friend who is a trim carpenter and framer and I can do the painting and carpet work myself. Only two walls would be necessary and we should be able to have that completely finished in a week or less. In fact, the house next door has the same floor plan and has had this very thing done except that they expanded the area into a single room as opposed to two as I am suggesting."
What I was proposing there was to make the addition look exactly the same as her neighbor's home in scale and quality. The only difference in the current appraisal and the prior one is that the prior one miscalculates the square footage, causing a completely different class of comps to be used which ultimately resulted in a large drop in value. Since I have experience in remodeling, albeit many many years ago, I am considering doing it at cost for my sister. I just need to explore any possible issues before I start on it.
Thanks...George
residentialguy
Elite Member
- Joined
- Mar 24, 2009
- Professional Status
- Certified Residential Appraiser
- State
- Minnesota
Still a bit confused. If you have to go through a garage, it still is not GLA. I wouln't pour much money into it.
Conservative in Virginia
Member
- Joined
- Aug 16, 2007
- Professional Status
- Licensed Appraiser
- State
- Virginia
You are a good brother George and I am sure many lenders would hope their customers work as diligently to make efforts to refinance impending balloon payments.. I agree with the opinions of the others about the accuracy of the current appraisal. As for paying higher taxes because of a wrongly assessed (size) I would take that up with your county assessors office.
As for renovating to make up for the additional square footage I would suggest you engage a competant certified residential or general appraiser in your area (maybe the same guy). He can advise you best perhaps how to proceed and perhaps give you some tips on things to do/not to do to avoid appraisal issues with lender down the road. These days the lenders pick or go thru a disinterested party to engage and appraiser so the 'guy' who helps you can not guaranty a 'value' as most likely yet another appraiser will be engaged but he should be able to give you some sound advice begin your project.
Good luck!
As for renovating to make up for the additional square footage I would suggest you engage a competant certified residential or general appraiser in your area (maybe the same guy). He can advise you best perhaps how to proceed and perhaps give you some tips on things to do/not to do to avoid appraisal issues with lender down the road. These days the lenders pick or go thru a disinterested party to engage and appraiser so the 'guy' who helps you can not guaranty a 'value' as most likely yet another appraiser will be engaged but he should be able to give you some sound advice begin your project.
Good luck!
Metamorphic
Senior Member
- Joined
- Mar 15, 2008
- Professional Status
- Certified Residential Appraiser
- State
- California
George:
Its unlikely that you will be able to make some kind of meaningful modification that will add value greater than the cost of the modification. Typically, the only situations where a modification will return more than the cost is when the thing being corrected really bad; far below market expectations; really dragging the price of the property down. This should make intuitive sense. If you can put $15k into a property and get a $30k return, everybody would be doing it. Sweat equity can close some of the gap, but you have to remember that you are not the only market participant willing to DIY, so that savings is already priced into the market at some level.
Even if you create a GLA hallway to that space on the other side of the carport, and make the modifications to the space to qualify it as GLA, a competent appraiser will likely, and reasonably, have the opinion that space would have less utility for the typical buyer than if that space were incorporated into the house in a more cohesive and natural fashion. So while you might end up with the GLA equal to a more valuable house, the value of your house would still be be less. Appraisers call this "functional utility".
If you turn both carport spaces into GLA you'd have to consider what kind of market there is for houses that large in that neighborhood. At some point you reach a point of diminishing returns. Appraisers call this an "over improvement". You've heard the saying "you dont want to have the biggest or nicest house in the neighborhood"? That's what they're talking about; over improvements; the improvements exceed the demands of that market and so add less to the value than you might otherwise expect.
Its unlikely that you will be able to make some kind of meaningful modification that will add value greater than the cost of the modification. Typically, the only situations where a modification will return more than the cost is when the thing being corrected really bad; far below market expectations; really dragging the price of the property down. This should make intuitive sense. If you can put $15k into a property and get a $30k return, everybody would be doing it. Sweat equity can close some of the gap, but you have to remember that you are not the only market participant willing to DIY, so that savings is already priced into the market at some level.
Even if you create a GLA hallway to that space on the other side of the carport, and make the modifications to the space to qualify it as GLA, a competent appraiser will likely, and reasonably, have the opinion that space would have less utility for the typical buyer than if that space were incorporated into the house in a more cohesive and natural fashion. So while you might end up with the GLA equal to a more valuable house, the value of your house would still be be less. Appraisers call this "functional utility".
If you turn both carport spaces into GLA you'd have to consider what kind of market there is for houses that large in that neighborhood. At some point you reach a point of diminishing returns. Appraisers call this an "over improvement". You've heard the saying "you dont want to have the biggest or nicest house in the neighborhood"? That's what they're talking about; over improvements; the improvements exceed the demands of that market and so add less to the value than you might otherwise expect.
Webbed Feet
Elite Member
- Joined
- Feb 11, 2005
- Professional Status
- Certified Residential Appraiser
- State
- Canada
Sue the prior appraiser that couldn't manage to properly measure a less than 1,500 SqFt house better than being fourteen feet off one dimension. It was most likely the primary cause of your sister today having a balloon loan in the first place. The prior refinance probably should have never have happened.
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