Black couple settle lawsuit as home value at $500k below real price

[Zoe]

See, I would have known if homeowner was contractor and did their own renovations. That, I would have known. I set SOW or no go. I can punt.

 

[Zoe]

May you live happily ever after. It has been nice meeting you. I am sorry I can't complete this assignment because I need this information you could not provide for my client.

 

[George Hatch]

The size, design and permit status of the property aren't part of the allegations and wouldn't normally contribute to the complexity of the appraisal problem when considering the existence of other such additions in that neighborhood. The problem for any appraiser in that neighborhood is the lack of sales. If there had been a dozen sales of those pole homes in the previous 12 months none of this would have ever happened. And the Austins would have never had the chance to say their home was worth $1.5M. Which even in 2023 does not appear to be the case.

 

[Tim Hicks (Texas)]

I just got an order where the taxes for a property were $4100 in 2021 when they bought a property for $725,000. They are selling now because the taxes are $13,500 based on their purchase price. Be careful what you wish for.

 

[J Grant]

Just as a reminder - the issue is not just her descriptive phraseology, idk how much hinged on that or not...

The issue was mainly about value. And while we are looking in the mirror for the verbiage that might hurt wrt PC narrative, I have been warning appraisers here for years to stop writing about a valuation coming in "low" or "lowballing" or the like.

There is no such thing in pure appraisal methodology as a "low" or "high" value ( though we do use those words, but using them and abusing them are two different things ). A value is either well-supported or poorly supported. We will never know which of the two values was faulty, the "high" one, or the "low" one (or if they both were bad , )

PS in a review, the reviewer is asked do you disagree or agree with the value. The reviewer is not asked if they think the value is too high or too low!!

Let's face it, the disappointment on the party's or clients' side typically happens in what they see as a "low" value. However, appraisers made it much worse with the beating up of appraisals for coming in "low", if it's below a sale contract price - the appraisal could very well be a well-supported MV opinion and the SC price happened to be higher than it.

Appraisers talking about low values and coming in low and lowballing, ( all used in a negative context) set the stage for reports to be scrutinized for that very thing.

We've all imo been careless or worse wrt our comments over the years whether written or spoken about values, prices, coming in low, coming in high etc. Probably it was not that important in the past, but now we are in the age of surveillance and scrutiny and on a bulletin board we can forget anyone can read it ..unfortunately, some of that abuse of concepts wrt value has bled over into the public where bad actors can to jump in and sue over it.

 

[Fernando]

The size, design and permit status of the property aren't part of the allegations and wouldn't normally contribute to the complexity of the appraisal problem when considering the existence of other such additions in that neighborhood. The problem for any appraiser in that neighborhood is the lack of sales. If there had been a dozen sales of those pole homes in the previous 12 months none of this would have ever happened. And the Austins would have never had the chance to say their home was worth $1.5M. Which even in 2023 does not appear to be the case.

Owners spending thousands of dollars into their homes expect to get higher appraisal value. When I see such homes and especially with no finalized permits, it's difficult to justify all the money put into their projects. Usually it's an overimprovement and I know homeowner won't be happy that they can't recoup the money spent into their homes.

 

[RCA]

The size, design and permit status of the property aren't part of the allegations and wouldn't normally contribute to the complexity of the appraisal problem when considering the existence of other such additions in that neighborhood. The problem for any appraiser in that neighborhood is the lack of sales. If there had been a dozen sales of those pole homes in the previous 12 months none of this would have ever happened. And the Austins would have never had the chance to say their home was worth $1.5M. Which even in 2023 does not appear to be the case.

It is disingenuous to say the permit status isn't part of the allegations because:

1. The plaintiffs would want to hide the fact that the improvements they claim were $400K and added to the value of the property over their initial purchase price of $550K in 2016, (a) Were in fact built by the owner himself as an owner builder, (b) Were far from completed and approved at the time of inspection 2020/Q1, (c) Were still uncompleted as of subsequent dates to this date - and so on.

2. If the appraiser-defendant had not caught this major defect in the appraisal ( and apparently she didn't) then the appraiser would very likely want to hide that rather major imperfection in the report as well - as well as any others. Apparently, the appraisers had no clue about the defects? Appraisers should have a certain understanding of construction and local practices. This is the fault of appraisal organizations which in A VERY DUMB MANNER proceed to believe that appraisers do not need to know what the **** they are doing.

3. This case has very great importance to the appraiser community in general, as it sets a precedent. To the appraiser community, this is not just about unfounded allegations but is also about any serious mistakes made by the appraiser. One of the lessons you should have learned on the last round of your USPAP-7 class via a set of videos by Dawn Molitar-Gennrich is that USPAP is intended to help keep appraisers from making mistakes that negatively impact the public's confidence in the appraisal profession.

With respect to this last point, the appraisal profession and so many supporting organizations have continuously whittled away at any confidence the public ever had in appraisers.

I would bet you, none of the appraisers who approached this property for appraisal in this lawsuit have ever properly appraised the property. They likely did not look at permits or the impact that the plaintiff was the one who was the general contractor doing the construction, or the fact that it has never passed inspection. They apparently did not fully consider the impact of income levels and multi-residential construction and zoning throughout the subject neighborhood (Marin City) with respect to surrounding communities and so on.

Your position on this actually makes my point. Your attitude is symptomatic and representative. Is there any doubt that residential appraisal has lost the confidence of the public and is disappearing as a profession? No. No. No.

Commercial appraisers are damaging themselves in other ways.

If there is any one place to point fingers, I would say it is the Appraisal Institute - which, according to my understanding, originates much of the training. The AQB of course has to approve training as well as state boards. So, they shoulder some of the blame. But to be honest it would be the AQB followed by the major organizations responsible for creating the training, with special concern for the state boards -which need to pick-up those aspects of practice peculiar to their state.

Shame.

 

[RCA]

Owners spending thousands of dollars into their homes expect to get higher appraisal value. When I see such homes and especially with no finalized permits, it's difficult to justify all the money put into their projects. Usually it's an overimprovement and I know homeowner won't be happy that they can't recoup the money spent into their homes.

I am very certain there are many sad stories related to owner-builders here in California. If you have been through the owner-builder experience, you might very well have come to the belief that the building inspectors, who are often independent contractors hired by planning departments to carry out inspections, are just trying to punish owner-builders for attempting to do their own construction rather than hire a licensed general contractor to manage the work for them. This may be perhaps some kind of implicit bias. Or, it may just be sloppiness on their part. But I would hint, there is indeed resentment among licensed contractors against owner-builders who manage their own construction and the hiring of subs.

 

[RCA]

I just got an order where the taxes for a property were $4100 in 2021 when they bought a property for $725,000. They are selling now because the taxes are $13,500 based on their purchase price. Be careful what you wish for.

We don't have that problem in California. So nice.

 

[shrubberyvaluation]

Just as a reminder - the issue is not just her descriptive phraseology, idk how much hinged on that or not...

The issue was mainly about value. And while we are looking in the mirror for the verbiage that might hurt wrt PC narrative, I have been warning appraisers here for years to stop writing about a valuation coming in "low" or "lowballing" or the like.

There is no such thing in pure appraisal methodology as a "low" or "high" value ( though we do use those words, but using them and abusing them are two different things ). A value is either well-supported or poorly supported. We will never know which of the two values was faulty, the "high" one, or the "low" one (or if they both were bad , )

PS in a review, the reviewer is asked do you disagree or agree with the value. The reviewer is not asked if they think the value is too high or too low!!

Let's face it, the disappointment on the party's or clients' side typically happens in what they see as a "low" value. However, appraisers made it much worse with the beating up of appraisals for coming in "low", if it's below a sale contract price - the appraisal could very well be a well-supported MV opinion and the SC price happened to be higher than it.

Appraisers talking about low values and coming in low and lowballing, ( all used in a negative context) set the stage for reports to be scrutinized for that very thing.

We've all imo been careless or worse wrt our comments over the years whether written or spoken about values, prices, coming in low, coming in high etc. Probably it was not that important in the past, but now we are in the age of surveillance and scrutiny and on a bulletin board we can forget anyone can read it ..unfortunately, some of that abuse of concepts wrt value has bled over into the public where bad actors can to jump in and sue over it.

I doubt the descriptive phraseology really mattered. I never say a valuation comes in low or lowballing, won't stop others from using the terms, especially in the RE industry. It is a non issue in my opinion unless its something truly egregious and not some code language that only the person getting the valuation lower than what they need can understand.