Client asking for specific data on appraisal

[chad hampton]

It’s my understanding that these things are asked for when they see things like a $5000 bathroom adjustment and a $10,000 pool adjustment and a $2000 fireplace adjustment. And the standard $30 square foot GLA adjustment on every house. Those might’ve been the market base adjustments 25 years ago but not today.

 

[Terrel L. Shields]

The adjustments resulting from the appraiser's judgment is based on a study and understanding of historic or past
buyer preferences. It further suggests that cost and depreciated cost data may be used with the appraiser arriving at the value
contribution (not cost new) of certain features.

But that's not the Fannie way. They want proofs, not support, and certainly not heuristic knowledge from 20-30 years in real estate.

 

[Terrel L. Shields]

And the standard $30 square foot GLA adjustment on every house.

Did any 1989 retro and the sensitivity indicated 1% annual depreciation and $15/SF adjustment

Did a big new house and the SF adjustment was $145/SF with RCN was $210 or so. Times have changed.

 

[Vermonter]

Those might’ve been the market base adjustments 25 years ago but not today.

Starting to get to the point where our "peers" that appraised this way are disappearing and lenders actually expect to see more varied adjustments between a $80k singlewide and $4 million lake home

 

[Terrel L. Shields]

o see more varied adjustments between a $80k singlewide and $4 million lake home

Too many appraisers choose by price range then make the numbers work. And too many appraisers use too many adjustments. I see appraisers make both a room count and a SF adjustment. OK. Perhaps, but are you sure you are not double-dipping? Too many pools are just a $10,000 adjustment - never adjusted by size or features despite the wild differences in pool sizes and costs. Too many outbuildings are just $10/SF or maybe just $5,000 or $10,000. Too many solar systems are "zero" even when owned in toto by the homeowner. And a geothermal system? System overload. And don't get me started on land. I've seen some of the craziest adjustments there - the simple way is just dollar for dollar but the problem is they have nary a clue as to the value of land in the area - "as if vacant and available for its highest and best use"... which is a textbook definition. If you value land at its current use, then you are basically saying certain obsolescences do not exist therefore the land value conforms to the utility even when the property is not at its HBU.

 

[George Hatch]

It’s my understanding that these things are asked for when they see things like a $5000 bathroom adjustment and a $10,000 pool adjustment and a $2000 fireplace adjustment. And the standard $30 square foot GLA adjustment on every house. Those might’ve been the market base adjustments 25 years ago but not today.

Also, relative to the amount you get paid. If you can figure out an easy way that shows you didn't pull it out of the air then you won't be ever asked again. I normally only have a couple adjustments in my big urban area. So for bathroom i comment on cost new &15,000 minus any depreciation and/or floor location influence. We have baths in finished basements here and in finished sheds. It's all row homes. Now you never have to go any further comments, your adjustment on the grid speaks for itself. You can say that for any physical piece.

Look for the GLA excell chart on this blog. It actually works well most of the time, you can adjust it. The chart looks good in the report. And have a separate page called adjustments to make it easier to find and read.

You idea is to show that you gave it thought, without having to show pages of calculations. I have never been asked what you have been asked. Make yourself smarter than the average dope you have to compete against. My appraisal is literally my work file.

These observations are right on point. How does anyone go about supporting a $5k adjustment of any kind in a $400k property? Their comps aren't that similar to each other.

We have a sensitivity worksheet for multiple factors and you can add as many factors as you like by inserting another line into the grid and copy/paste the line above it. I don't use this one because I write in excel so all my math is in my "form". But if your appraisalware vendors aren't doing it then you can do it on your own.

 

[George Hatch]

 

[alebrewer]

Agreed w/Chad. It's been my experience that, if I say I used grouped sales analysis, and the adjustment brings in line one group of adjusted sales with another, it's pretty self explanatory. It's when the adjustments don't make sense - or the property is very unique - that I see the requests for additional explanation/support.

 

[Dublin ohio]

It's when the adjustments don't make sense - or the property is very unique - that I see the requests for additional explanation/support.

Rural appraisals fall into the above many times. Especially when it comes to differences in site size and outbuildings. I always provide additional commentary in those situations. I can't remember the last time I has a stip on a rural appraisal

 

[alebrewer]

Rural appraisals fall into the above many times. Especially when it comes to differences in site size and outbuildings. I always provide additional commentary in those situations. I can't remember the last time I has a stip on a rural appraisal

Yeah, I think for a long time folks just got away with the canned, "Sensitivity analysis was used to extract zzz adjustment." When, in fact, they had no clue what sensitivity analysis really was/is... Now, folks are getting called out. I know nothing about OP or his analysis capabilities, but I do see a lot of folks getting called to task for saying they used zzz technique, when it's obvious in the analysis that they didn't.