Damage Estimates Affecting Value?

[Dartage]

Just wondering how other appraisers treat this type of situation.

I am doing an appraisal for a divorce and the owner is handing me some repair estimates for water intrusion. She only has one estimate for $46,000 which is primarily to do waterproofing and other remediation efforts to prevent water from entering from the crawlspace and into the lower floor of the house. There is no visible damage to the home that I can see other than 2 sandbags placed in a downstairs doorway. The owner states that the other party also so water entering into the home.

My question is, is one repair estimate sufficient to base an adjustment on. The problem is that the owner clearly wants to have this damage impact the valuation to lessen the amount that she has to give to the husband. Or at least that is my read on it. So if there is only 1 repair estimate and no clearly visible damage but there may be some issues with drainage, etc., what would you adjust the property for and for how much?

Would you take the single repair estimate at face value and lop that amount off the value? Or make no adjustment as there isn't sufficient enough data (no visible damage to the home and only 1 repair estimate which seems very, very high?)

 

[Tim The Enchanter]

I would theorize their estimate is extremely biased and see how that idea pans out first.
Can you say skeptical?

 

[Meandering]

Give them two values,

One as if there isn't any issue, EA there is no issue.

and one as-if there is an issue, EA there is an issue.

State in the report, what you saw, what you were told and that you could not determine the validity of what you were told.

Let them fight in court whether there is an issue or not.

.

 

[Michigan CG]

My question is, is one repair estimate sufficient to base an adjustment on.

No, especially if it seems biased. For $46,000 you can build a new basement.

 

[J Grant]

Just wondering how other appraisers treat this type of situation.

I am doing an appraisal for a divorce and the owner is handing me some repair estimates for water intrusion. She only has one estimate for $46,000 which is primarily to do waterproofing and other remediation efforts to prevent water from entering from the crawlspace and into the lower floor of the house. There is no visible damage to the home that I can see other than 2 sandbags placed in a downstairs doorway. The owner states that the other party also so water entering into the home.

My question is, is one repair estimate sufficient to base an adjustment on. The problem is that the owner clearly wants to have this damage impact the valuation to lessen the amount that she has to give to the husband. Or at least that is my read on it. So if there is only 1 repair estimate and no clearly visible damage but there may be some issues with drainage, etc., what would you adjust the property for and for how much?

Would you take the single repair estimate at face value and lop that amount off the value? Or make no adjustment as there isn't sufficient enough data (no visible damage to the home and only 1 repair estimate which seems very, very high?)

IS the 46k a "damage" estimate to fix a needed repair (water intrusion), or a preventive measure? (waterproofing to prevent water from entering?) Can you ask permission to call the husband, get his history on water damage since you saw noting visible?

Is there is a phone number on the 46k estimate; can you call the contractor, ask if they saw damage or if this is a preventative measure. If it is a preventative measure, it is not a damage issue and should not affect value..(.unless all the comps have had this kind of expensive waterproofing done and subject lacks it .)

If you feel dealing with the veracity/relevance of the estimate/or any potential water issues is beyond your expertise, imo withdraw from the assignment.

 

[Restrain]

I go with the two estimates and a statement that outside inspections and bids for remediation may affect the final estimate of value. I realize that sales with similar issues will be impossible, but I would also think that the remediation costs appear excessive. You can take what has been given to you and do your own analysis, coming up with your own cost to cure (BTW, were you provided photos of water in the basement? Even with minimum penetration there should be some evidence). Remediation (diversion of the water) may be as easy as a French drain.

 

[RSW]

It kills me when an appraiser makes a dollar for dollar adjustment for a cost to cure when the adjustment should be market driven.

 

[Red Flint]

Discuss with your client, including the use of extraordinary assumptions. If there is mold within the walls or floor joists as a result of water intrusion, the cost to cure estimate may be low. The other side may have their own appraiser. You may not know the exact cost to remediate the situation until the true extent of the damage is uncovered, which is why the estimate may be high.

There are several options, as discussed prior with using two values, or asking for more time to get two additional quotes. I prefer a cover your butt move and appraise the property without intrusion using an assumption since there is no visible damage. This way the judge or attorneys can settle the property issue, then settle the intrusion issue as a separate matter, and you will likely not need to be called in as a value expert on water intrusion. This may not make your home contact or client happy, but you could look forward without worrying about a future problem that usually is not adequately fee compensated.

 

[Mark K]

I am doing an appraisal for a divorce and the owner is handing me some repair estimates for water intrusion. She only has one estimate for $46,000 which is primarily to do waterproofing and other remediation efforts to prevent water from entering from the crawlspace and into the lower floor of the house. )

I've seen this scam many times with spouses that have to buy out the other in a divorce. They follow you thru the house pointing out every nick/dent/scratch; they remind me of a car salesman when you go to trade in a vehicle.

I ignore the small stuff and use an EA to cover the stuff that the spouse is claiming but is not obvious. I've heard things like ...'the well runs dry after one shower, the septic backs up in the spring, the AC doesn't work/the furnace can't keep the house warm, there's a strange smell, crawl space fills with water, roof leaks (no interior evidence), etc'.

Use an EA, tell the attorney that its outside the scope of your assignment to obtain bids, order inspections, etc. Let them fight it out in court; don't get in the middle of it.

 

[Kitarkus]

Just wondering how other appraisers treat this type of situation.

I am doing an appraisal for a divorce and the owner is handing me some repair estimates for water intrusion. She only has one estimate for $46,000 which is primarily to do waterproofing and other remediation efforts to prevent water from entering from the crawlspace and into the lower floor of the house. There is no visible damage to the home that I can see other than 2 sandbags placed in a downstairs doorway. The owner states that the other party also so water entering into the home.

My question is, is one repair estimate sufficient to base an adjustment on. The problem is that the owner clearly wants to have this damage impact the valuation to lessen the amount that she has to give to the husband. Or at least that is my read on it. So if there is only 1 repair estimate and no clearly visible damage but there may be some issues with drainage, etc., what would you adjust the property for and for how much?

Would you take the single repair estimate at face value and lop that amount off the value? Or make no adjustment as there isn't sufficient enough data (no visible damage to the home and only 1 repair estimate which seems very, very high?)

Respectfully, it seems that you may have already lost your sense of objectivity. Who is your Client here? The female owner has provided you with documents which may/may not be pertinent to the valuation of this property. The fact that she has already attempted to sway your opinion....and it appears that she has succeeded....imo leaves you with 2 options. (1) Recuse yourself from this Assignment where the access provider is attempting to influence you or (2) regroup and get a hold of yourself...readdress the scope of work....perform your due diligence....and complete the assignment properly and without any influence from stakeholder(s).

If you select #2, I would include comments in your Report indicating that the access provider provided you documentation relating to water infiltration at the property....and describe your findings from your thorough inspection. Now that she has shown you these documents....you may need to make some assumptions relating to the validity of those documents (or require additional professional inspections) within your Report.