FHA Appraisal: No Value given for Inground Pool

[ackiej25]

We just had an FHA appraisal come back on a house and it came up $6,000 short of the asking price. The house is in exceptional condition with a heated saline inground pool. The appraiser did not give any value for the pool. Is this standard? In addition, the house has new roof and new hot water heater and these were not considered either. The house is in CT. Thanks!!

 

[444nutman]

I have appraised in subdivsions that based on market data, a pool is not worth anything. Those subdivisions usually had a nice large community pool. There is a difference between cost versus value. The thing is I am not familiar with your market so I cant comment on your particluar appraisal. Did the appraiser state in the report why a pool adjustment was not warranted? I know of a lender that does not want any value given to pools but I dont know if this was the case in your appraisal.

 

[Josh Shapiro]

I have heard of pools having a negative impact on value as well. It will all depend on your market. Are homes in your neighborhood with pools selling for more than ones without? Is th home in a neighborhood with very few pools and happen to have a community pool? What are the costs of year round maintenance? Being in CT, what is the cost to close up and re-open your pool every year? Do these costs out weigh the need for a pool? many different reasons and questions to ask....

 

[Lobo Fan]

I do not give extra value for a new roof as a line item, but factor it into the overall condition of the property. It is assumed that all the comps have a water tight roof, so there is minimal market reaction. Also a roof and HWH could be considered routine maintenance rather than an upgrade or an update.

Swimming pools can vary widely. I did one once where I deducted value for the pool. It was in the yard of a small nasty little tract grade house. When I pulled back the pool cover I almost yacked. The smell was nasty and the water was black and coagulated. I gave it no value and deducted the cost to fill it in with dirt and make a planter of it.

It was a hazard to the neighborhood children and pets, not to mention a science experiment.

Your mission is to supply comps to your lender that you feel are more similar to the subject property than the ones used.

From what I know of Conneticut (which is not much) $6000 is pretty darn close.

 

[SutnNC]

Ditto that and that.

As far as the roof, if the old one was leaking or nearing it's "useful" life, they may have had to put one on (in which case, it needed to be done). Same for the HW heater.

Good selling points, but the buyers and sellers in any market would provide the value points. It's not the "cost of" or "what" has been improved that contributes to value IF people are NOT paying extra for them (pools, new hw heaters, new roofing) basically. VERY market sensitive. In some area's, these things are just helping homes sell. In other area's, people may be looking for these things specifically and are willing to pay for them.

Every market is different but think about it this way...... If five houses are for sale at the same price and four have old roofs, old hw heaters, no pool and one has them all replaced or installed (pool, all other things being the same or similar), most likely a buyer will go for the one with the improvements.

OR (extracting market "value" for an improvement/feature from the local market)

If five houses sold for the same amount, four have older roofs, an old hw heater, lack a pool and one has them all replaced or installed (pool, all other things being the same or similar).......there is no "additional" value for those features/improvements.

A pool may cost $15K-$30K but without researching the market (for market "reaction" and/or presence of a costly improvement in an area vs value/improvement) can lead to some misinterpretation as to what is actually offering value and not just costing a lot of money. Cost does not [always] get added to value. Cost can meet, exceed or be under value.
Appraisers are not supposed to add value for "stuff" if people are not paying for the "stuff." Hope that helps.

 

[SutnNC]

PS, the asking price is not [always] the value of the home.....I know you know this. It's more of a magic number.

 

[Webbed Feet]

We just had an FHA appraisal come back on a house and it came up $6,000 short of the asking price. The house is in exceptional condition with a heated saline inground pool. The appraiser did not give any value for the pool. Is this standard? In addition, the house has new roof and new hot water heater and these were not considered either. The house is in CT. Thanks!!

I am unsure if you understand what you posted means to a real estate appraiser. As my only response can be "So? What's the problem?"

Read the definition of "Market Value" in the real estate appraisal and then ask yourself what "Asking Price" has to do with what the assignment of the appraiser was all about.

I ditto the other pool comments. A house must have a functional roof. So comparing one functional roof to another functional roof often does not result in meaningful market extraction. You seem to be assuming none of the comparable had good roofs. A hot water heater? Yes, a good hot water heater is a good thing to have. Most houses that are sold generally have functioning hot water heaters. If your house is of an age it needed a new one, probably so were all the other sales (comparable) used around the same age, and it is likely many of them also had replaced the hot water heaters.

Part of the problem here is you don't understand that real estate appraising does not get down to that level of comparison on an item for item basis like that. We look at the overall condition and quality of a house, but we don't have a point system for each and every item imaginable under the sun that goes into building a house. The reason is we are not costing the house for construction, we are estimating the market value of homes with all sorts of various repairs, updates, and deferred maintenance all in one house. Your house has a new roof and hot water heater, a comparable sale used has new windows and carpeting, but your house does not. The idea is, overall they compare, and no condition adjustment should be made. So to perform an analyses of real estate values to a level you are implying, are you prepared to pay $5,000 for for the real estate appraisal?

I once had a home owner get upset because he felt he had better door knobs than everyone else had, and I didn't seem to care. Perhaps I should have forced him to get on the phone with real estate agents and ask them to identify the door knobs that the houses I was using for comparable had. I suspect after the first several phone calls the gentleman would have begun to understand why I didn't seem care. Besides, I'd just come from a multi-million dollar home, and honestly, I didn't care about the door knobs in his $300,000 house. So I suppose he was right about my not caring.

Best Wishes.

 

[Paul Isolda]

Where in CT?

 

[Mike Kennedy]

ackiej25, the market (i.e. buyers of local homes) determines the contributory value, if any, of an inground pool. Cost of an improvement has no bearing on its' market value - an improvement can return cost, less than, or more than cost. With all aspects of a residential property - it depends on location and buyers perception and action reflected in closed sale prices (after deducting any sales concessions).

It is not uncommon for sellers to fill in inground pools to sell homes after extended "days on market" and several reductions in List Price as buyers in a particular market clearly demonstrate by lack of offers they consider additional taxes, maintenance, and insurance liability as negative factors and purchase other homes.

It is also not uncommon for homes in particular neighborhoods to ALL (or most) have inground pools. Buyers in that particular neighborhood clearly demonstrate (via the existence of the pools and resales of properties with them) very strong demand for that amenity. This is usually reflected in increased sale prices.

It may very well be market data research in your potential purchase's neighborhood, and adjacent neighborhoods, demonstrate market resistence to inground pools i.e. no closed sales, actives, or contracted sales (other than yours), within the prior 1,2, or 3 years with a pool. If so, that information should appear in the comments section (or addendum) within the appraisal report. If market indicated no contributory value for the pool (substantiated in comments) and demonstrated by comparables utilized which also did not have a pool - then they would not be adjusted upward for any incremental additional/Residual Contributory value for lacking that Amenity.

It may very well be, depending on whether the Appraiser had required access to market data, was out-of-market, or simply failed to perform the necessary due diligence (including expanding time beyond 6 mos to 12 mos.) to actually confirm the existence of other homes in that neighborhood which DO have inground pools. It may be other closed sales within the prior year (either superior or inferior to the subject) were not utilized due to other significant variances which negated their credibility as value indicators. It may also be other sales with pools in the neighorhood SHOULD have been utilized.

Options:

a. obtain additional RECENT data on local properties from your Real Estate Agent (if you are using one) which demonstrate market acceptance and contributory value for inground pools and forward them to your Lender.

b. hire a local Experienced Appraiser in close proximity to the property's location and request a market data survey to obtain the data necessary to provide support for any additional MARKET value for the pool and forward that to the Lender.

The roofing and water heater should have been addressed in the report as having impact on Effective Age and Overall Condition. Should the comparables utilized also report similar upgrades or equivalent ones - there would typically be no upward adjustment for those elements. In either event, comments should be in the report.

Providing additional information to the Lender (assuming there is any) may, or may NOT, be considered.

Good Luck.

 

[Michigan CG]

......A hot water heater? Yes, a good hot water heater is a good thing to have........

If the water is hot why do we need to heat it. :new_all_coholic:

I would like to know what price range this home is in.....size of house, is it a typical home. Asking price and Appraised Value.