Believe I Am The Victim Of Incredibly Unfair Appraisal

[Bonesteel]

Comps 1-5 are closed sales, there is a 6th comp I did not reference as it is on market(266 days with average turnaround of under 30 days), and the appraiser stated no weight was put into it

 

[jay trotta]

Comp 1
996 sq ft
Sale price 116,500
Adjusted price 123,580(value assigned to my house)

Comp 2
1201 sq ft
Sale price 143,000
Adjusted price 133,080

Comp 3
1268 sq ft
sale price 130,000
Adjusted price 113,140 (this is the least comparable based on number of adjustments all significant $ amounts against me and all unsupported by the other comparables)

Comp 4
1368 sq ft
sale price 164,900,
Adjusted price 148,600

Comp 5
1199 sqft
Sale price 165,400
Adjusted price 146,266

The adjustment value would lead one to believe that comp 1 is most comparable, but a look at the adjustments will be seen to be all against me, at higher$ than market supports ( pairing comps shows those adjustments make little difference) and none other than sq ft made in my favor, at a significantly lower $than the market supports(pairing comps shows a much larger adjustment needed)

OP: "Now the report, and the description of home. The home is a 1400 sq ft ranch with the original 24x24 square built in 1946, the rest was added on at 3 different times each about 15 years apart. From 2010 when I purchased as a foreclosure until 2015 the entire interior was remodeled. All new plumbing, all new electrical, original section of homes foundation block replaced, and 2x8 floor joists replaced with 2x10 to match rest of house and modern code (was slightly sagging previously) the ceiling joists in that area were 2x4 and I added sistered 2x6 joists to meet modern standards.

First & Foremost, I do not know your Market area; but Comp #1 appears to be an outlier (GLA difference over 15%) and may skew the input;
Unadjusted range with it included: $116k to "165k and without it; $130k to $165k, sometimes more is not necessarily better, it clouds the process.
Good Luck

 

[Bonesteel]

Comps

What year were they built? That might be a big factor.

Here are the elements that stand out most to me in your original description

- The core of your home - the most expensive portion to build - was built in 1946 and was 5756sf, possibly a 1bd/1ba floorplan. The subsequent additions were added after that.

- The appraiser's comments about older homes topping out at $88k would have amounted to $152/sf for a 576sf home, that factor being comprises partly of the land value and partly of the improvements value.

- the subsequent comments about improvements only adding so much to a particular property type are absolutely true. Until you get to the highest value ranges where money is no object it's real easy to add a higher quality interior or higher quality kitchen or excessive outbuildings than fits the market in which the subject would most commonly compete.

- So if the proposition here is that the 576sf house with multiple additions is directly comparable in the market to another home that started and ended at 1260sf, I've basically never seen that in real life. The bones in the core of your home on its foundation are still 70 years, and - unless it was all changed - so is the exterior design, the floorplan and room sizes of that portion of the home.

- I have no idea if this is the case but if your home is part of a post WWII subdivision of homes of that size, age and design then the effects of everything in your immediate neighborhood on the maximum values that neighborhood will support in the market are significant.

- If the only sale among the comps that's in that age range and in a comparable neighborhood is S#1 and the others are all newer in design and construction and are in neighborhoods of homes that are similar to them then that might explain why the appraiser thought S#1 was more indicative of your value than #2, which is the next smallest home.

- Based on the pricing and as a group , those sales don't appear to be that similar to each other. That situation raises questions of its own. When S#2 and S#5 have a 12% spread in value and it's not in the size of the home then something else is going on. When S#3 sells for 9% less than the slightly larger S#2 then something else is going on.

I am quite certain that original age of the home is the primary factor in his selection.

As for the bones being 70 years old, the foundation block, all floor joists, all ceiling joists and all interior walls were replaced in 2010, the rafters had been previously replaced, I have no idea when but they look new. This information should have been available to appraiser from building department, and I also attempted to tell him personally, but he did not want to hear anything about the upgrades.

At this point I will believe that comp 1 could be considered the most comparable, but then shouldn't adjustments be made for considerable differences. All "superior comps" were adjusted considerably, with the "inferior comp" given no adjustment for anything other than an unexplained $20/psf

Also, do not consumers define what is a comparable home?

"This does not mean that the comparable must be identical to the subject property, but it should be competitive and appeal to the same market participants that would also consider purchasing the subject property. "

Maybe in some areas age is a major factor but in my area there is no evidence that consumers differentiate even slightly based on whether a home was built in 1925 1950 or 1975, also no evidence that consumers note any difference between a house built as 1400 sq ft, or a house build as 600 sq ft with 800 sq ft addition.

I find it incredibly hard to believe that a consumer looking at 1975 built 1358 sq ft home would opt to purchase a 1975 build 996 sq ft as opposed to a 1945 built 1400 sq ft home based on age alone.

Am I wrong, or is an appraisers job to interpret what a consumer would pay for a home? It seems to me that for an appraiser to state that age makes more difference than GLA, that there should be some market data to back that up.

I see nowhere that fannie mae says age should be a consideration.

"These characteristics include, but are not limited to, site, room count, gross living area, style, and condition."

Of course it says not limited to, but shouldn't the prime characteristics as definined, have more weight than age (did not seem worthy of a notation by fannie mae)

It seems to me that putting significant weight into a characteristic not defined by fannie mae and not supported by market data, would enter into the realm of an appraiser trying to set value of a home instead of extrapolating from market data.

 

[Bonesteel]

I guess I am just struggling to see how this appraiser, or any other appraiser, or certainly any consumer can justify that the only difference between a 996 sq ft 1.5 story bulgalow with non conforming upstairs GLA, and a 1400 sq ft ranch is a pittance GLA adjustment of less than 20% of the predominate $/sq ft

 

[Bonesteel]

Sorry for being such a PITA I'm not trying to argue or fishing for certain answers, mostly I'm just trying to wrap my head around some things and see if there may be justification for my concerns, or if I am just totally off base, I understand nobody here has enough information to properly asses the entire situation, nor am I looking for that, just wondering if the few points I have are at all valid

 

[bnmappraisal]

Sale Price/GLA (price per square foot) on the sales comparison grid has a lot of things "built into it" and therefore the actual GLA adjustment is often much less than that "price per square foot"

 

[Tim The Enchanter]

Sale Price/GLA (price per square foot) on the sales comparison grid has a lot of things "built into it" and therefore the actual GLA adjustment is often much less than that "price per square foot"

Yes. Like land value, garages, outbuildings, pools, yadda. The price per SF is not all that meaningful for comparison purposes.

 

[George Hatch]

Every market is different and I don't presume to know your's. So that's a qualifier for the comments that follow:


I were doing this assignment in my region.....

In no case would I voluntarily present the sale of a 1975yb home that was originally built at 1300sf as a direct comparable for a 1946 sf home that has been tripled in size by additions - unless it was the last sale on earth. So to speak. The designs and features and floorplans and room sizes evolve over time, which all by itself affects curb appeal as well as utility. Condition notwithstanding.

When it comes to properties where an appraiser is using the term "overimprovement" let me explain to you what's going on. It means that they think this property's attributes grossly exceed whatever the maximum range is for such properties. Everything beyond that point is excess, the additional contributory value for which will be a fraction of what would apply for the homes in the normal size ranges. If the largest homes on your block don't exceed 900 feet the adjustment factor between 700sf to that 900sf will be at one rate and everything above that will be way less - often less than half that other rate.

So yeah, I can see how it might be possible that the adjustment factors for 1970s homes in the 1200-1400sf range could be (let's say) $35 or $40sf but the difference between an 800sf home and a 1400sf home in that 1940s neighborhood - which is where the best comps would be coming from if they existed - was a lot less. I'm not saying that's necessarily the case in your situation, but I HAVE seen that happen in my region and I've appraised a number of properties exactly that way.

 

[Bonesteel]

I understand that the adjustments for GLA should never be near the price/sq ft as that includes al things that are "built in" and that small percentage GLA increases usually result in lower price/sq ft as the small increase in size does not usually affect desireability.

I'll rephrase question

Would any of you compare a 996 sq ft 3 bed 1 bath 1.5 story(996 is counting upstairs measured all the way to the 2 ft tall knee walls) to a 1400 sq ft 3 bed 1 bath 1 story without making any adjustments for size or utility other than the same $psf adjustment that you would make between a 1200 sf and 1400 sf house with the same with same layout and just slightly smaller rooms

(in my case good size closets in every room, with the resulting room still significantly larger than the comps corresponding rooms with 0 closets in entire house. A large laundry room vs a stackable with no extra room in the furnace and hwt closet [the only closet in entire house] and an entrance foyer with large front closet. None of which add to room count)

 

[timd354]

I understand that the adjustments for GLA should never be near the price/sq ft as that includes al things that are "built in" and that small percentage GLA increases usually result in lower price/sq ft as the small increase in size does not usually affect desireability.

I'll rephrase question

Would any of you compare a 996 sq ft 3 bed 1 bath 1.5 story(996 is counting upstairs measured all the way to the 2 ft tall knee walls) to a 1400 sq ft 3 bed 1 bath 1 story without making any adjustments for size or utility other than the same $psf adjustment that you would make between a 1200 sf and 1400 sf house with the same with same layout and just slightly smaller rooms

(in my case good size closets in every room, with the resulting room still significantly larger than the comps corresponding rooms with 0 closets in entire house. A large laundry room vs a stackable with no extra room in the furnace and hwt closet [the only closet in entire house] and an entrance foyer with large front closet. None of which add to room count)

I would suggest that you submit a written request to the lender which documents all of the apparent errors that you see with the appraisal, requesting them to have their chief appraiser review the appraisal and if the chief appraiser agrees that these are substantive errors, having the lender request the original appraiser to correct those errors or having the lender obtain a second appraisal from another appraiser.