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Comparable’s

KHS445

Member
Joined
Aug 20, 2011
Professional Status
Appraiser Trainee
State
Michigan
Need to be clear I am not an appraiser, but you have commented on questions I have asked. I’m just trying to get an understanding of the process and how it was not questioned or was noted as observed such as the foundation walls as average and crawl space requirements you commented on yesterday. I find it concerning I’ve dumped 30% of the homes value in the first year as things were noted as structurally safe but were not. I’m making sure before I go flinging accusation that I am not wrongly doing so. I’ve got some more questions if you could give me some opinions. The Licensed inspector made assumptions too so we trusted their word and it has been a costly mistake. Thank you sir

Just to be clear. Appraisers appraise value and Home Inspectors inspect the structure and associated amenities. Yes in the course of their inspection of the property the Appraiser should be noting and considering possible adjustments on things like condition, functionality, effective age, amenities, structural components, and a host of other things. The Home Inspector is not particularly concerned with the value of the property and focuses on the structure, codes, working condition of mechanical and electrical systems, roofs, windows, foundations, etc. The Appraiser gives you an estimated value based on their observation and the Home Inspector gives you a list of items, conditions, issues they have observed and documented and generally an estimated cost to cure each deficiency they have observed.

Did the Appraiser have a copy of the completed home inspection prior to the inspection or the issuance of the appraisal? Do the appraisal and home inspection differ in conditions or issues observed and noted? Were any of the differences generally observable to an average person walking thru the property? Were the costs you experienced just the cost to cure whatever the issue was or did you go beyond with upgrades and additional improvements? What I call you might as wells. As long as we are fixing, repairing or doing this we might as well do this other thing.

In another comment you said the same Appraiser completed a pre-listing appraisal and did not include the unique outbuilding(s). That would make me think that the pre-listing appraisal probably includes some sort of comment about the uniqueness of the property. Did you purchase the property at or below the pre-listing appraised value? Are the comments, pictures, valuations, etc. reasonably similar between the pre-listing appraisal and the most recent appraisal?
 

PointerAppraisal

Sophomore Member
Joined
Jul 3, 2007
Professional Status
Certified General Appraiser
State
Ohio
The client of the original appraisal is the one who the appraiser discussed the assignment with and determined the scope of work and the level of analysis to provide them with credible results. There are three generally accepted approaches to value. Sales comparison, Cost, and Income. Sometimes in complex circumstances or for complex and important uses an appraiser will use all 3. You were probably not involved in the decision on what the client needed, that and therefore, you have questions on why things were done a certain way or not completed.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
It should also be noted the appraiser did a pre listing appraisal for the sellers
Sounds like they had a dog in this fight to begin with? So how much time between.
Or post that redacted appraisal showing the house value without land?
Yes, and it isn't necessary to redact. Nothing keeps someone in possession of a report publishing it...they are given a copy by the lender. And if there are few comps then you have to use some sort of proxy for the property...or rely upon the cost or income approaches. If secondary market, they don't allow cost approach to be used as the primary way to value it, although a conventional bank can.
The other issue is that if the appraiser relied upon the inspector in terms of defects, then perhaps they were influenced by that.

I am working on a report where a small amount of land with a small, older home and has a large metal shop building...which is where the value actually lies. So I've scoured a huge area for comps and frankly none of them are very good. I will search some more. But I may have to rely partly or wholly upon the cost approach as well.
 

Cob

Senior Member
Joined
Mar 30, 2006
Professional Status
Certified Residential Appraiser
State
Texas
I'm not an appraiser. I don't understand how an appraiser can complete an appraisal without the land value included unless there are separate parcels involved (one with the house and another adjacent property). Can you explain? Or post that redacted appraisal showing the house value without land?

Cost Approach is not required by Fannie Mae (including land/site opinion of value), although most lenders still want a land/site value it is not required, if the appraiser completed an appraisal for the seller for the listing of the property, he probably didn't complete the appraisal on a FNMA 1004 report, he more than likely completed it on a General Purpose Appraisal form, which also does not require a cost approach or land/site value.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Cost Approach is not required by Fannie Mae
I think that if you don't understand the value of the underlying land, you cannot make proper adjustments for much of anything else. To assume all the lots are equal value outside the most uniform of subdivisions is an invitation to a low quality report. I've seen too many bad reports and I've seen a lot of state board sanctions that concluded the land value of comps vs subject is central to the complaint and when developed, the difference between the cost approach and sales approach. And almost uniform in those complaints involving land value, they note no support for the land value and no reconciliation between the difference in the cost and sales approaches.
 

Cob

Senior Member
Joined
Mar 30, 2006
Professional Status
Certified Residential Appraiser
State
Texas
I think that if you don't understand the value of the underlying land, you cannot make proper adjustments for much of anything else. To assume all the lots are equal value outside the most uniform of subdivisions is an invitation to a low quality report. I've seen too many bad reports and I've seen a lot of state board sanctions that concluded the land value of comps vs subject is central to the complaint and when developed, the difference between the cost approach and sales approach. And almost uniform in those complaints involving land value, they note no support for the land value and no reconciliation between the difference in the cost and sales approaches.


I was simply answering the persons question that didn't understand how an appraiser can complete an appraisal without the land value included, I wasn't giving any opinion on the matter.
 

Denita Neuenhaus

Junior Member
Joined
Jul 21, 2015
Professional Status
Real Estate Agent or Broker
State
Florida
I was simply answering the persons question that didn't understand how an appraiser can complete an appraisal without the land value included, I wasn't giving any opinion on the matter.
I appreciate the answer you provided.
i agree with Terrel though -
 

sputnam

Senior Member
Joined
Apr 24, 2012
Professional Status
Certified General Appraiser
State
North Carolina
The fact that the appraiser didn't report the land value doesn't mean that the appraiser didn't determine the land value for the subject... and for the comparables.
 

ramrcdk

Senior Member
Joined
Jan 15, 2008
Professional Status
Certified Residential Appraiser
State
North Carolina
The fact that the appraiser didn't report the land value doesn't mean that the appraiser didn't determine the land value for the subject... and for the comparables.

AGREE
AND: Summary Report on a General Purpose Form...is (not necessarily mandated to be) a Narrative-type Report.
And where most of the conclusions found for the Summary Report are in the work-file of the appraiser. (Example: extracting land value, etc. to be compared by sales)

Thread Starter: TOO many unknowns via your limited post ...to be of assistance to your Concerns.
AND: "The Previous Loan as stated: No comparables found." Lender must have had ample other criteria for the basis of the loan.
 
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