Common Adjustment For A Detached 2 Car Garage

[TN Pro]

Sue the bastid for the security system adjustment. How many companies will install one for free for the monthly monitoring fees? BTW, the owner got raped for a $46k detached garage, but don't let that lessen your animosity for the appraiser. If you are really a RE agent or Broker then you know damn well that cost doesn't equal value and maybe you don't quite understand what the contributory value of a detached garage is and better brace for lawsuits for misrepresenting the value. I dunno, but if you start to throw stones, you better have your sheets together less you find yourself on the wrong end of the bench...

I like the new super aggressive Mr. Rex

 

[TRESinc]

I'll play devil's advocate here. Tell Home Depot or Lowe's that cost does not equal value.

why? terrible example. they are in the business of selling you materials to improve your home. they are salesmen, of course they are going to tell you that doing a $20,000 kitchen remodel will improve your home's value by $30,000. it's what they do.

 

[Denita Neuenhaus]

OP, I too am an agent and faced with similar appraisal results for various types of properties. Detached garages in some sectors of my market are highly desirable and command a premium (here). I do as one or more of the posters suggested and find the most recent sales with and without detached garages to determine, if possible, the value of the detached garage. It is tough to do as the variance in the detached structures in my area is huge. But we know going in that the cost of the improvement doesn't have any relationship to the value of the improvement.

When there is a different appraised value I do NOT challenge the appraisal. It is a waste of your time even if there is an error in the appraisal, it won't change the opinion of value in my experience.

What I have found to be effective is to have a frank discussion with the buyer's agent (if I'm the listing agent) about what the buyer thinks the value of the detached garage is worth to this specific buyer under contract. We then renegotiate the contract sales price accordingly. Sometimes we can get it worked out and sometimes we can't. In most cases the buyer has to bring in the additional funds over and above the appraised value to the newly negotiated contract sales price. Or the seller drops to the appraised value or some compromised value. Remember, the appraisers are working with past sales. We are working on future sales. There is a lag time and if you are in a fast moving market, this is when you will see "differences of opinions". It is part of our business. The appraiser is there to protect the bank, their client, first and foremost. The buyer is not the client, the lender is the client.

Edit: Almost forgot the most important part: you have the appraisal in hand showing the appraiser valued the 1200 sf garage at $6k. When you (or the buyer's agent) point out this value to the buyer in the appraisal, the buyer will draw his own conclusions as to the value of the garage especially if you provide documentation on other recent sales with and without garages. This helps tremendously when it comes to working out differences between the appraised value and renegotiating the sales price with the buyer.

 

[bnmappraisal]

What I have found to be effective is to have a frank discussion with the buyer's agent (if I'm the listing agent) about what the buyer thinks the value of the detached garage is worth to this specific buyer under contract. We then renegotiate the contract sales price accordingly. Sometimes we can get it worked out and sometimes we can't. In most cases the buyer has to bring in the additional funds over and above the appraised value to the newly negotiated contract sales price. Or the seller drops to the appraised value or some compromised value

Good to hear some input from "the other side" - it is helpful.

The buyer is not the client, the lender is the client.

I wish more agents understood this

 

[residentialguy]

But we know going in that the cost of the improvement doesn't have any relationship to the value of the improvement.

I agree if you mean cost doesn't always equal value. (which I'm sure you mean) But for those lurking that might not understand, I'll add this to that. Your cost can't be lower than value...no one in their right mind would pay more for an existing garage when they can build a shinny new, completely to their design liking...for less. That would not fit the definition of market value where you have a buyer acting prudently, knowledgeably and assuming the price is not affected by undue stimulus...whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest.

 

[Denita Neuenhaus]

I agree if you mean cost doesn't always equal value. (which I'm sure you mean) But for those lurking that might not understand, I'll add this to that. Your cost can't be lower than value...no one in their right mind would pay more for an existing garage when they can build a shinny new, completely to their design liking...for less. That would not fit the definition of market value where you have a buyer acting prudently, knowledgeably and assuming the price is not affected by undue stimulus...whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest.

Yes ^^^, of course you are right. It didn't even occur to me that the cost would be lower than the value. Thank you for clarifying my point. I see improvements all the time where the appraised value is substantially less than the cost to build eg pool, barn, detached garage, etc. It's a matter of getting the seller to understand up front, before you list, that the expensive detached garage built to the seller's specifications is worth much less than they spent building the garage. This can be difficult as the seller has a pre-conceived idea not grounded in reality. I feel for you OP.

 

[The Bob]

I have an appraisal for a pending home sale in a neighborhood around the 275-310K price point. All have 2 car attached garages. A few homes have an additional detached garages which includes the one I have pending. The garage is all brick, 1200 sf w/steps to stand up attic storage.

The appraiser is giving a $6000 adjustment for this detached garage. The owner can document that he paid 46K for the garage in 2004. FYI-The appraiser is giving a partial rear fence (.15 ac) and a security system a $3000 adjustment on the same property.

Would you consider this to be a typical adjustment that an appraiser would use in this price point and if not, what would be an adjustment you would consider?

From your description of the neighborhood, it sounds like the houses are similar given that tight range in prices. So, based on the pending contract price, how much more is this house selling for as opposed to recent sales without an extra garage?

 

[EddieB]

Apparently the OP has moved on to other concerns. Go figure....

 

[bnmappraisal]

Guess (s)he didn't like what (s)he read ...