Can Enclosed Garage be counted Living Area

[Steve Owen]

To give every appraiser license to go out and make up definitions/ standards of measurement and reporting as they go along, using only "the market" as a source is a dangerous (and ridiculous) notion.

Actually, it is the only notion that makes any sense at all. If the market proves it, then I don't need anything else.

 

[sunnycal]

What does an appraisal valuation report? Ummm oh it is MARKET VALUE... I almost forgot.

 

[GENTEEL]

Compare and adjust according to market data. To give every appraiser license to go out and make up definitions/ standards of measurement and reporting as they go along, using only "the market" as a source is a dangerous (and ridiculous) notion. It just seems counterproductive for everybody to be acting/writing their own glossaries, standards and methods when there are plenty out there to guide us. Today it's GLA, tomorrow it's something else. If the relativist madness continues we'll soon have to read a two page definition of every line on the form just to have any clue what the appraiser is doing or how things are defined.

There are EXTREME cases where it might be warranted, a few related by others here on the forum (Barry Dayton has had at least a doozie), but this work-a-day stuff is pretty elementary. Why re-invent the wheel everytime we have something a little bit different?

Wholly agree and nicely put but reality dictates otherwise as if to say, "to each his own", no wonder we have problems defining and stating a problem.

I had appraised an SFR where a finished room was improved without a permit. Although I measured it but did not include to the GLA. My mentor requested me to amend the sketch, include the room count, remove your comments and make adjustments accordingly. After a little discussion, he stated that we must comply with the previous data/records as "given" and thereby supported, inclusive of 'buyer's appeal'. Giving him a few examples and never did agree with him, I had to finally submit, all in the name of "the market".

 

[Lawrence R.]

Again, the market

Even if the rest of this was true (and it isn't) the possibility exists that the government could come in and make you remove an illegal, unpermitted addition. Therefore, in the context of an appraisal done for the secondary mortgage market, due dilligence would require the appraiser to determine legality.

Aren't we to assume that the market included that risk when they assigned a value to it in their actions? Cuban cigars are illegal, but the market will pay for them, lol

 

[Steve Owen]

After a little discussion, he stated that we must comply with the previous data/records as "given" and thereby supported, inclusive of 'buyer's appeal'. Giving him a few examples and never did agree with him, I had to finally submit, all in the name of "the market".

That isn't about "market" that is about going along to get along. There's a big difference. If you had found multiple sales of similar properties with the same condition, then it would have been about the market. You need to learn to tell the difference.

 

[Lawrence R.]

Snark Alert

What does an appraisal valuation report? Ummm oh it is MARKET VALUE... I almost forgot.

Don't be too snarky as a newbie, I like to try to say only the salty dogs around here do that....

 

[sunnycal]

Ok that's fair. My point is that FNMA, ANSI are only guidelines and often mean to be departed from. The fact is that local market conditions/traditions dictate appraisal practices. Within the greater Los Angeles area there are different methods to deal with these situations.

As I've stated Los Angeles allows unpermitted accessory units and Culver City does not. Topanga as many homes that were built or rebuilt completely without permits that get sold and have market value all the time. This is due to the building and zoning departments inability to keep up with requests for permits and inspections for homes that were destroyed in a natural disaster. Residents were forced to choose between not finishing their homes before rainy season and waiting for a one year backlog to get permits. Many expensive homes have sold nonetheless bringing in market value despite the fact that they were not permitted or legal. My job was to determine market value for a mortgage transaction. I had to use my geographical competency and longer addendums to complete these assignments.

 

[GENTEEL]

That isn't about "market" that is about going along to get along. There's a big difference. If you had found multiple sales of similar properties with the same condition, then it would have been about the market. You need to learn to tell the difference.

I understand what you are implying. I picked the comparables that were similar in room counts but having found that one of the rooms of subject was an addition AFTER inspection (and without a permit) and when confronted the owner, she mentioned it. None of the comparables mentioned anything about permits. Does that mean that I must follow this trend and include the subject's room count regardless of permits simply because "records/data" show otherwise? Is that ethical and legal?

 

[George Hatch]

There is "permitted", and then there is "permissible", the former being a subset of the latter. HBU analysis refers to the latter, but the different lenders have varying interpretations; some of those only include the former.

Besides that, the fact that an addition may not be "permissible" doesn't mean it doesn't have value in the market.

More and more, we're getting to the point wherein what a lender will accept in terms of valuation methodology and criteria may sometimes not entirely mesh with the definition of "Market Value" upon which these appraisals are allegedly based. Market Value is defined by the actions of buyers and sellers, not those of underwriters and reviewers.

Maybe we need to start including in our appraisals a second opinion of value geared specifically to a lender's stated criteria - like "Mortgage Value". That way, some of these underwriting decisions can be properly attributed to the lender rather than an appraiser masquerading as an unbiased observer.

 

[Steve Owen]

What George said.