Appraisal didn't include similar house in comp

[Rutang]

I'm doing a refi, and my appraisal was much lower than anticipated, about $125k less than a CMA from a reputable realtor. In the appraisal, the comps listed are all 600-700 sq ft smaller than my home, with 3 less bedroom, and 2 have 1 less bath. In the appraisal, it notes my home is in good condition, similar to other homes in the area in both condition and style, and needs to upgrades to be marketable. The appraisal does not include a house that sold in March, same sq ft, floorplan as mine.

My house - 2100 sq ft - 6 beds, 2 baths, $210k
Comp1 - 1440 sq ft - 3 beds, 1 bath sold for $234k on June 1, 09
Comp2 - 1500 sq ft - 3 beds, 2 bath, sold for 249k on June 10, 09
Comp3 - pending 235k sale - 1400 sq ft - 3 beds, 1 bath

The house ommitted from comps:
2100 sq ft, 6 beds, 2 bath - $352k March 10, 09

My house has no garage, so have a neg adjustment for that, and my condition is listed as good, the others are very good, so I have another negative adjustment for that. No positive adjustment for additional bedrooms, GLA adj is only $15/sq ft.

I understand price per square foot is not a way of determining value, but the 3 comps are about $150/sq ft, the omitted house is almost $180/sq ft, and mine is $100/sq ft.

I'm not an appraiser, so I am just a little confused. Is the March house, that is almost identical to mine, not recent enough to include. And I got almost no positive adjustment for additional sq footage and beds, even though the local market does reflect higher selling prices for additional beds and square footage.

My loan officer is urging to contest the appraisal. Is it worth it? To refi, I need an appraisal of at least $238k, which I thought was in the bag. Living in the area for almost 10 years, I think I could get sell my house is 8 hours for $210k.

 

[Michigan CG]

From what you have disclosed, the appraiser is an idiot if he were in my markets....

.............GLA adj is only $15/sq ft..........

Who is your lender? Where is the appraiser from, and do you have the appraiser's resume? No one appraises my home unless I know their experience.

Big bank lenders send the least experienced appraisers who will quote the lowest fees and fastest turn times.

If you have a copy of the appraisal find a local GOOD appraiser to review it. www.appraisalinstitute.com.

If the review turns out that the appraisal is credible (I doubt it is) then accept the reality. If not, demand a refund of your appraisal fee and turn the appraiser in to the state.

You have some homework to do.

 

[Thomas Fiehler]

Timothy made some good points. Other points: Is all your GLA above grade or is some including the basement? If comp #3 was a pending sale then it should not have been used as comps 1-3. Those should all be closed sales. Get a copy of the appraisal, get a competent local appraiser to review it, then if there were mistakes, and it appears there might be, demand a refund of your appraisal fee along with an appraisal completed by a competent local appraiser. Then, file a complaint with the state appraiser's board because it seems to me, the appraiser needs additional classwork.

 

[Rutang]

Our home is a 2.5 story. Full staircase to "third" floor of the home, the staircase is not a pull down, or in a bedroom or anything like that. 2 rooms + full bath up there. Full "attic space" above that. The rooms are heated, have windows;its part of the house.

Is the house from March to long ago to include? It is essentially the same house as mine.

I have a copy of the appraisal and I will check up on the appraiser. In his report, he writes that the local market does not reflect price increases for additional bedroom, which seems ridiculous. Also, the $15/sq ft GLA seems low, but I am not in the profession. Is there a range that is typical from your experience, even though it may be in different markets. 7-10% of the avg price per square ft seems low to me, but I'm an internal auditor not an appraiser.

 

[TJSum]

What part of PA are you located in? There are plenty of PA forum members who might be from your area and would be willing to help out.

Unless the sf and bedroom differences can be explained away with basement finish areas, or unless your home is really in bad shape, from what you described, it does not add up.

 

[Victoria]

There should be at least 3 closed sales as comps, since comp #3 is a pending sale it makes me wonder if there is an additional comp page which you did not see or is missing. Which makes me wonder if there are other pages missing which might hlep this make more sense. Do you have a copy of the appraisal report? If so, make a copy and black out the identifying info (your name, bank name, property address, apn, and legal description) then scan it and attach it to your next post. It is really hard for people on here to give advice on such limited info.

 

[Ajax in CA]

How to find PA forum

What part of PA are you located in? There are plenty of PA forum members who might be from your area and would be willing to help out.

Unless the sf and bedroom differences can be explained away with basement finish areas, or unless your home is really in bad shape, from what you described, it does not add up.

rutang:

This is good advice. To find the PA forum go to the tool bar above your original post. Click on User CP. Click on the drop down menu for Forum Jump and scroll down until you get to the State Forums. Go to PA and click on that.

Good luck. Something sounds strange regarding your appraisal. It would be a good idea to have a reputable appraiser in your area take a look at it.

 

[SutnNC]

There are a number of variables and reasons why the appraiser may have used and omitted certain properties. PRIOR to calling the appraisal police, you should look into what you already have. Which is what you are doing here, in part.

You may detect a bit of sarcasm here but don't take offense. Homeowners typically know their market better than the appraiser; what contributes to value, what does not, etc. This has quickly become an overwhelming trend. For assignments regarding the marketability/value of a home, the objective would be to obtain supporting factors that the/a typical buyer would/may potentially substitute for yours (this would sound like what the objective was for this assignment). IMHO, a buyer looking into a 2100 s/f home would probably not give a look at a 1,400 sq/ft home.

Is there a chance that your house is one of the few biggest/baddest than most in the area? Is it overbuilt for your area? There is some mention of upgrading that you haven't disagreed with. What kind of shape/age is your house in comparison with the other "perfect" comp. Is there a significant amount of deferred maintenance (have you let it go)? NOT to say it (352k comp) should have been omitted and substituted for a significantly under improved site (in comparison to yours), but there are other things to consider. One property is not the starting point in most cases but would be some indication, potentially in this case, that the under improved properties (in comparison to yours) may not have been the best for use. Again, there are numerous unknowns here that we cannot answer for you. Most often, the best and only answer is "it depends." Open ended, but honest. The answers to your questions depend on your market. So, it depends!!

As mentioned in the prior posts, your best bet to help your current situation, which is most likely time sensitive, would be to hit the internet/phone book (what's that?) and seek the advise of a LOCAL appraiser familiar with your area. There are a number of options you can explore that, most likely, won't cost you the excessive fee you were probably initially charged for your first appraisal. Grab a scotch on the rocks and Google- AMC and appraisal fee's. You'll be thrilled to know!

Utilizing a pending property as a primary indicator is not regular practice by any means. It would be difficult to give you more specific answers as there are a great NUMBER of variables that need to be considered; I.E. there appears to be a huge spread between the 210k and 352k? Is that 352k in another neighborhood supported by other similar values in that area; a trend for it's market area? Are we talking about a totally different buyer (not that your selling, don't read into that)? It could be just a couple of streets between two houses but the market trend could vary dramatically.

You will not be the first to disclose what a wonderful job the appraiser did in completing the assignment for your house, so take a breath and step back from what you have and try to obtain another opinion that would be more objective than yours. Resolve this and worry about creating and solving others later. You may be surprised, no matter what the outcome.

Additionally, a CMA by a Real Estate Broker would offer me (personally) little comfort. Motivation is a HUGE factor on so many levels. In most cases, the results of the CMA would DEPEND

From there (contacting a local appraiser and handling this), you can concern yourself with who needs to pay for what on whatever level. A partial lesson here (potentially) would be not to rely on others to do what should be done. Next time, ask for a card, ask about their experience and how long they have worked in the area (this may or may NOT have been a factor here, we don't know). This may sound like an insult TO MOST initially, but those who are proud of their experience, that do put the time in to do their job well and have knowledge within in area will most likely respond with confidence. I have no problem when somebody asks me and feel that whomever IS ASKING is only doing so in THEIR own best interest. We are a service industry that often has a significant impact on lives (good or bad and not to any "fault" of ours). IT IS WHAT IT IS.

IF, in fact, knowledge and experience is sacrificed for speed and fee's, than the public suffers tremendously (which is also a growing trend). Still, every case is different and many inquiries are subject to emotion and bias.

Again, start looking into finding some professional help (regarding the appraisal, not for you just yet!) -and go from there. This would be a good starting point in moving forward totry and resolve any potential or lack of discrepancies in the report that has already been done.

Then have another scotch

Good luck-

 

[Webbed Feet]

Hmmmmm

Guys....

For funzies... Let us subtract sale price of comp 2 from sale price of identical model match from march....

$352,000 - $249,000 = $103,000.

Subject has 600 square feet more than comp 2.

$103,000 / 600 = $171.66 per square foot for an additional 600 square feet to the market? Yeah, it's a rotten way to look at it. But either the comps used by the appraiser are not remotely the same "Market" as the subject.. or somebody is not telling us something.

For the original poster.. No, March is not too long ago. We can use as many comps as we want.

 

[Lobo Fan]

Generally speaking the March sale is too old to use as one of the first three comparables, though it could be used as 4 - 6 as additional support for the market value. It would depend upon your market. If you are in an area where values are declining 2-3% per month, then a March sale may no longer be relevant. If you are in a market with a more gentle or minimal decline then a March sale could still be very relevant.

The suggestion to find a solid local appraiser to perform a review for you would be a good idea. Be ready to spend a few hundred bucks for the service. If the second appraiser thinks you have a poor appraisal and can list the reasons why, then you would have some ammo for some relief.

That $15.00 per square foot number sounds very odd. I apologize for you having to deal with something like this.