Do I need railings? And question about comps

[lifeisgoodtoday]

I'm so glad I found these forums! I have a few questions. I will be getting my house appraised for a cash out refi with Fannie Mae standards. My lender said to expect the appraiser to come in the house. Here are my questions:

My house is a raised ranch style, built on a hill with a side entry garage under the main level of the house. The stairs that come up from the garage/unfinished basement to the main living area currently don't have railings and they are not enclosed with walls. We moved the location of the stairs, and part of the use of the cash out refi will be to finish out the area of the basement where the stairs are located. So its basically a temporary set up until we build walls down there and then the staircase will be enclosed.

Question #1 is - will the lack of walls/railings on the staircase be an issue with the appraisal? If so, will it just hurt the value of the house (how much?), or will it be something the lender could actually have an issue with? I could build a railing real quick but I'd rather not mess with it as I am finishing up another project right now.

My other questions are about how comps are determined. My house is a ranch - do the comps also need to be ranch style homes? Or will two story homes (say a colonial) be considered as well if the location/square footage/beds/bath matches up? Also - my house was built in the 50's, but in 2014, we gutted the entire existing interior, ripped off the old garage, and added a new larger garage and addition that doubled the size of the house. Turned it into an open concept with new kitchen and bathroom in the existing space. Also replaced the roof and siding so from the exterior it looks like a totally new home. So for comps, would the appraiser look for homes built in the 50's or closer to the time of the complete renovation?

 

[Fernando]

I'm not an expert on railings on staircase. I only had one experience long long ago.
As an appraiser, I had to take rear photo of house so client/lender saw the lack of railing.
I don't know their guidelines of client/lender but homeowner had to put a railing and I had to go back and take photos of the new railings.
Maybe things changed now.

 

[nstanbru]

If the appraiser considers it a safety hazard, you may have to install railings prior to funding.

 

[Rlong]

Yes, handrails may or may not be seen as a "safety hazard" by varying appraisers. If the call it out, you can temporarily install if you don't want them, silly game but it happens. Ideally appraiser will search for a minimum of three "matching" updated/remodeled 1950's ranches like yours...from your neighborhood / area. Then if not found gradually expand the criteria (which criteria to expand are not universal: location, style, updating, oh my) until an adequate number of comps are found. When they can't all match you should expect some inferior and some superior... we can't use all superior! : ) Good Luck

 

[lifeisgoodtoday]

Thanks for the replies!
We did go ahead and install railings on the staircase to circumvent any possible delays, and are pretty happy with how the project turned out. We like it enough that we might change up our basement finishing floor plan to keep the staircase open now, so it worked out for the best.

The appraisal was today and we had a funny moment to start. The appraiser sat in his car in front of our house for a few minutes. I figured he was taking a call or something. But when he did come up to the door, he asked me if I was expecting an appraiser. He had pulled the MLS listing and pics from when we bought it in 2009, before our addition and renovation, and he thought he had the address wrong because the house looks so different now . When I explained all of the work that had been done, he said "So basically I'm looking at a new house!"

I will be interested to see what comps he chooses. I looked and looked at past sales and current for sales, and there seems to be a wide range of properties that match the characteristics of our house about 75-80% that he could justify using, with a variety of price points. But only one property in our age range that had a complete renovation within a mile radius, with similar square footage. Still has one less bedroom though with a smaller lot size (although more comparable than most other properties around me). It is for sale with a pending offer, and I hope he uses it because the price is well above what I thought it would be.

 

[Fernando]

Thanks for the replies!
We did go ahead and install railings on the staircase to circumvent any possible delays, and are pretty happy with how the project turned out. We like it enough that we might change up our basement finishing floor plan to keep the staircase open now, so it worked out for the best.

The appraisal was today and we had a funny moment to start. The appraiser sat in his car in front of our house for a few minutes. I figured he was taking a call or something. But when he did come up to the door, he asked me if I was expecting an appraiser. He had pulled the MLS listing and pics from when we bought it in 2009, before our addition and renovation, and he thought he had the address wrong because the house looks so different now . When I explained all of the work that had been done, he said "So basically I'm looking at a new house!"

I will be interested to see what comps he chooses. I looked and looked at past sales and current for sales, and there seems to be a wide range of properties that match the characteristics of our house about 75-80% that he could justify using, with a variety of price points. But only one property in our age range that had a complete renovation within a mile radius, with similar square footage. Still has one less bedroom though with a smaller lot size (although more comparable than most other properties around me). It is for sale with a pending offer, and I hope he uses it because the price is well above what I thought it would be.

I feel sorry for that appraiser. If like me, I had my comps ready based on 2009 info from MLS. Now you have a "new house", I have to get all new comps and change my mind frame of your home.
I need more time to find suitable comps and if none I have to go further proximity. That's why I usually appraise homes not too far from where I live. If too far, appraiser may have to take another trip to get the perfect comp you were hoping for. If no time, appraiser may use the comps when he/she was there. In this situation, your feedback on the pending sale would help the appraiser.

 

[lifeisgoodtoday]

I feel sorry for that appraiser. If like me, I had my comps ready based on 2009 info from MLS. Now you have a "new house", I have to get all new comps and change my mind frame of your home.
I need more time to find suitable comps and if none I have to go further proximity. That's why I usually appraise homes not too far from where I live. If too far, appraiser may have to take another trip to get the perfect comp you were hoping for. If no time, appraiser may use the comps when he/she was there. In this situation, your feedback on the pending sale would help the appraiser.

Well funny you should mention that, because I did give him a list of houses I felt came close to matching ours in type of neighborhood (we aren't in a subdivision), house details, lot size, etc. I included 4 sales in the last two months, 2 pending sales, and 1 just listed. I had to go up to a 1.5 mile radius for the recent sales but the active listings are all less than a mile away. I also gave him a list of all the updates/renovations we made, with dates, and some details about what makes our location very desirable within our city. I heard that realtors sometimes do that. I was a little worried about offending him, but I also thought it might be helpful. So I'm glad to hear that I might have lessened his work somewhat.

And can I just say that I don't understand the market right now? In my city almost every recent sale I looked at was listed and had an offer within 2 days. And prices are definitely higher than I expected, and selling very close to asking price. We are a little suburb in NE Ohio, and houses don't normally move that fast. With covid uncertainty, job loss, etc, I thought things would be a lot slower.

 

[Terrel L. Shields]

So for comps, would the appraiser look for homes built in the 50's or closer to the time of the complete renovation?

Ideally they would like to find comps built in the 50s or 60s that have been remodeled extensively sometime in the last 5 -15 years or so. Not always easy to find.

 

[lifeisgoodtoday]

Ideally they would like to find comps built in the 50s or 60s that have been remodeled extensively sometime in the last 5 -15 years or so. Not always easy to find.

No kidding! I only found one whole house remodel that was anywhere near the size or neighborhood of my house, and it was built in 1977. And it is an active listing with a pending offer, not actually sold yet. I looked at sales up to a year old.

 

[JTip]

If an 80yo grandmother is carrying up a 1yo grandchild up these basement steps, and at any point on the steps you begin to cringe waiting to see an accident happen, then you probably need a handrail.