Deferred Maintenance - Cost to Cure

[Richard Carlsen]

Just wondering... have you ever been questioned on those adjustments from a reviewer or had to defend them in court?

No on both questions.

 

[Jason Barber]

No on both questions.

Thats kind of what I figured and don't get me wrong... you deserve every bit of respect for being that qualified.

Let me ask the question this way... if I (an appraiser with only 5yrs experience) were to make these types of adjustments and you (a very experienced appraiser) reviewed one of my reports... would I get called out for not extracting adjustments from the market? I'm only asking because there are many times when I can't extract contributory values with such limited data... and therefore I don't make any adjustments at all.

 

[Richard Carlsen]

Let me ask the question this way... if I (an appraiser with only 5yrs experience) were to make these types of adjustments and you (a very experienced appraiser) reviewed one of my reports... would I get called out for not extracting adjustments from the market? I'm only asking because there are many times when I can't extract contributory values with such limited data... and therefore I don't make any adjustments at all.

Understand that I am speaking from a general market region where there are counties without any stop lights, where the state and federal governments own 68% of the land, where the two county populations are under 9,000 each and where comps may be up to 12 miles away from the subject. In other words, a low density, essentially rural market. Would I, reviewing one of your appraisals from this market, call you out for not doing a market extraction for condition adjustment or any other adjustment in the grid? The answer is no I would not. As long as you explained to me that there was not enough data available on these particular properties to make a definitive adjustment. That said, I would call you out for not making any adjustment if upon my viewing of the property and/or any MLS listing photos or data from my own reports, I perceived a significant difference in condition between subject and the comp. Not making any adjustment for an obvious difference in condition would amount to being misleading to the client, essentially stating that you found the conditions of the subject and the comp equal. That would be unacceptable. If there really is insufficient data available, then I would expect you to use your geographic competence, education and experience to give an appraisers "best estimate" of the market reaction to the difference in condition between the subject and comp with appropriate notation in the report.

What one finds over a period of time is that market tend to view condition, sq footage, 2 stall garages, ect. (the attributes of a SFR house) with a very similar eye and react in a fairly predictable way that is reflected in the contributory value of that particular attribute based on condition. Just the same as a site valuation within a completed subdivision can be logically made based on the allocation method when there are no unimproved sales or sales of any similar houses. Historically, a sub may show a 15% site value/sales price ratio based on extraction or direct sales. Lacking either, it is reasonable for the appraiser to estimate the value to be 15% of the total value based on allocation. In the same way, finding over a period of time in a certain rural area that market contributory value of condition within a certain value range can be reflected in a $1500/year adjustment in the sales grid based on perceived effective age, is an example of an appraiser using the data from his appraisal library which is the sum of all of his experience to put forward a reasonable, defensible adjustment in light of direct market data.
Not making any adjustment simply because the data is not available through one methodology is not an acceptable appraisal practice in my book.