Updated square footage on appraisal, but no change in value

[tman79]

We are in the process of purchasing a home and the appraisal came out lower than the sale price by $10000. Upon closer examination we noticed that the square footage was wrong and verifed that the floor plan sketch was wrong in several places - one wall being off by 8 feet. The square footage went from 2137 to 2486. This also affects the square footage of the partially finished basement. The difference is 16.3% higher. We submitted a request for reconsideration through the bank with supporting documentation and they came back with a corrected appraisal. The square footage was right this time, but the appraisal states that this doesn't change the value of the home.

The appraiser noted on the new report:
"The appraiser indirectly "transposed" a measurement on the sketch that inadvertently affected the overall square footage of the home. The appraiser has corrected this issue and has made the appropriate adjustments. Although the subject is slightly larger than originally reported, it has not affected the overall outcome of the appraised value."

This statement is inaccurate. We identified at least 3 places where the measurements were off. In one place the wall was 32' long and the sketch only indicated 24'. Is a 16% increase in square footage "slight"? Is it possible for that to not affect the value when all of the comp adjustments went up by about $10,500?

How can this be possible? This changes the adjustments on the every comp by at least $10000. How can this square footage not affect the value, not even a little bit? Can anyone explain this to me?

 

[Michigan CG]

I would suggest you take that question to your lender and get an acceptable answer. In my area that would be a ~$7,000-~$17,000 adjustment for a typical home.

 

[23Degrees]

Without knowing the specifics or being familiar with the market it is unlikely anyone here will be able to definitively answer the question. However, if the original appraisal, and current appraisal for that matter, have adjustments for square footage in cases where the difference is equal to or less than the ~350 square feet difference in question then you might have a legitimate question from a purely mathematical perspective. A 16% increase in living area might not result in a change in market value but in this case I'd expect a fairly thorough explanation if this was the case considering the circumstances.

What you do have are two signed reports and the possible ability to utilize the appraiser's own calculations to fight your case. If I were in that appraiser's shoes I would want to make very sure that the two reports at least made sense relative to each other after accounting for the correction in question. If this is not the case you could have a big axe to swing at them. If there is real laziness or incompetence here you could have a pretty dramatic display of it through the presence of the two signed reports.

 

[Riick]

???
Did the square footage of the comparables also change?

.

 

[CANative]

Appraiser's who state "the variance makes no difference in value" should really be saying "the variance makes no difference in my opinion of value."

Value is ALWAYS an opinion.

 

[tman79]

The comps were the same on both reports. The square footage on the property being appraised increased, but the comps remained the same. So the adjustments to the comps all changed, on average by about $10,500.

On the amended report the appraiser wrote:
"The Appraiser indirectly "Transposed" a measurement on the sketch and inadvertently affected the overall square footage of the home. The appraiser corrected this issue and has made the appropriate adjustments. Although the subject is slightly larger than originally reported, it has not affected the overall outcome of the appraised value."

According to the sketches this was not simply one number/measurement transposed. We noticed at least 3 measurements that were glaringly obvious. One wall by 8 feet - from 24 feet to 32 feet. He says, "the subject is slightly larger than originally reported." Is a 16% difference a "slight" difference? Then he says that it has not affected the overall outcome of the appraised value. When you look at how the adjustments on the comps change, it seems that there is basis for a $10,000 change. What could I possibly be missing? I hate to file a complaint if this appraiser didn't make a mistake, but if they are purposely holding the value to an arbitrary number then I think that should be addressed.

 

[Webbed Feet]

<....snip....>

How can this be possible? This changes the adjustments on the every comp by at least $10000. How can this square footage not affect the value, not even a little bit? Can anyone explain this to me?

Ahhhhhhh............ We have an around 2,100 square foot based analysis that turned into around a 2,500 square foot based analysis. Just pondering even if the sales comps somehow bracketed both footages would mean a sale comp with less than 2,100 would have an adjusted PRICE go up MORE, and one that bracketed as larger than 2,500 would have an adjusted PRICE that would go down LESS.

 

[tman79]

There were no changes in the comps. The adjustments to the comps changed because of the square footage updates. The adjustments moved up by about $10,500 on each comp.

The appraiser noted on the new report:
"The appraiser indirectly "transposed" a measurement on the sketch that inadvertently affected the overall square footage of the home. The appraiser has corrected this issue and has made the appropriate adjustments. Although the subject is slightly larger than originally reported, it has not affected the overall outcome of the appraised value."

This statement is inaccurate. We identified at least 3 places where the measurements were off. In one place the wall was 32' long and the sketch only indicated 24'. Is a 16% increase in square footage "slight"? Is it possible for that to not affect the value when all of the comp adjustments went up by about $10,500?

I'm just trying to figure this out. I don't want to make trouble for an appraiser who is doing an honest and good job, but if the appraiser is not doing a good job I would like to know so that we get an accurate appraisal.

 

[JTip]

Please provide the square footage of all the comparables used along with SALES price and ADJUSTED SALES price.

Sale #1
Sales price
Adjusted sales price
square footage

I have a theory but need more info.

 

[Webbed Feet]

<....snip......>

I'm just trying to figure this out. I don't want to make trouble for an appraiser who is doing an honest and good job, but if the appraiser is not doing a good job I would like to know so that we get an accurate appraisal.

Just a note from the peanut gallery. Fannie Mae put the word "Accurate" on her appraisal forms, the appraisal trades did not stick that word there nor do we prescribe to it. (other than appraisers that use the word referring to value opinions while apparently not comprehending their own profession) An "Appraisal" is "... an opinion of value." There is no such thing as an "accurate" opinion. Facts can be accurate, opinions are not.

Opinions are either credible or they are not credible, based upon the use of correct or incorrect facts, assumptions, and analysis.

Now your case. No appraiser on this forum can confirm or deny for you the quality of credibility of the two appraisals done by this appraiser. Please strongly note I said "two appraisals." Do not confuse my meaning. I did not say two reports, an "appraisal" is an opinion of value. The reason I say two appraisals is based on my unfounded opinion that your market area, the same as ones I work in, is NOT going to see a 2,100 sqft house to be in the same class as a 2,500 sqft house IF we are talking relatively recent construction.

I believe most appraisers reading my words are going to follow me if I said a 1,500 sqft house is not in the same class as a 2,500 sqft house. A completely different set of comps would be needed between the two. .... Well, in my experience any 1,800 sqft to 2,100 sqft range "class" very typically has floor plan functional issues that start to become corrected once the size of the homes are increased to 2,400 to 2,700 sqft. Builders typically tried to cram too many rooms into the smaller size homes for advertising purposes, resulting in too small of rooms and very chopped up feeling homes with marginal layouts. The larger size homes begin to, or completely, relieve this issue as I've seen in market areas I work. Keep in mind my statements probably do not apply to, for example, a market of 1875 to 1945 year built houses.

What does my above mean? If the subject is built years 1990 to 2012, IF there is not an extremely dire lacking of comparable sales (there were other appropriate sales to select from) an event of discovering incorrect measurement of that nature causing a thought 2,100 sqft house to be found to really be in a 2,500 sqft class would call for a completely new analysis of the market value of the house. If for no other reason than the prior reconciliation "weighing" of the comparable probably cannot be defended at all. Most likely at least one new comparable would have to be introduced (to the sales comparison grid) and at a minimum the entire original market research for comparable (if an urban area with many sales available) would need to be completely redone. The reason for this later comment is the fact the original search would have been bracketing 2,100 when it should have been bracketing 2,500. Any new analysis would call for a new "fresh" final reconciliation "weighing," even if it somehow resulted in the same comps given the same weight.

If my assumptions above have credibility, for your market area that I have no idea about, then I start to find it very unlikely to arrive right back at the same prior value conclusion. I also find a one or two sentence "analysis" regarding the situation out of the appraiser to be a total joke. If you care for an opinion regarding if the appraiser doing a "good" job or not? Well, right there my opinion is the appraiser is not.

The appraiser originally appraised a 2,100 sqft house, and then had to correctly appraise a 2,500 sqft house. Those are two different houses and two different real estate appraisals. If all you were given was what you posted for justification, then that is a complete joke.