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Got to see my first appraisal. I have a few questions.

Zoe

Senior Member
Joined
Sep 15, 2020
Professional Status
Certified General Appraiser
State
Tennessee
I got to witness my first appraisal. It was interesting. It consisted of a 10 min tour through the house and maybe 5 minutes to walk around the outside. I spent a lot of time researching and reading over the last year. I was within a few thousand of where I thought it would land on my refinance. I worked the number up just out of curiosity, I only needed a certain dollar amount and knew I would be over that. It was a little harder than I expected being in a rural area with no comps within a few miles. I feel like I was pretty spot on, especially considering 2 of the houses that were used for comparison were two of the 6 that I had listed and based my guess on.

My appraisal came back good and my questions are just for knowledge.

I realize the comps and research take a lot longer than the physical part of the appraisal.

Property is around $250k and 2k sq feet.

A few questions:

1) Is there any way to determine the land value from a standard appraisal? I see a line under the comps that reads site with adjustments for the price. The value of the adjustment is different for each one. On one the SQ ft is listed at around 20k sq ft for the property and gives my 3 acre lot a $15k adjustment. On another it is listed as 35k sq ft and gives me a $8k adjustment. The final one is half an acre less than mine and gives me no adjustment.

That is the only mention of the land I see. I read that as my an land is worth $6k an acre on the first one and $4k on the second one. I think that is a little on the low side. For $4-6k an acre, I'd certainly buy all the neighboring land if I could. I'm not sure if I am making a connection that isn't there. Land is relatively cheap in my area but I'd Do these adjustments mean something else or would they adjusted for the area and actually worth more than mine per acre? Given that my appraisal doesn't list a land value outright that I see, I doubt these others would. It would almost require appraising the comps and doing comps on them to give a value in that manner.

Can anyone give me some insight into how that line works?

2) I didn't realize there were so many rules for appraisers. I tried to find an appraiser to give me a walk through and point out things I should fix/do to ensure my home had a clean appraisal and to maximize the value but all of you have been so busy that I could barely get the appraisal for the house at all. If I have some questions about my property, how would I approach the appraiser? I should of asked when he was here but it was all pretty fast.

Could I offer him a consultation fee for email/text/phone call only consultation? Would asking the value of my land per acre be outside of a consultation? I just want to know some basic information and I don't need any paperwork or anything.

Can appraisers legally make any comments as to whether a price is within the realms of accuracy? Say that I wanted to buy an acre from a neighbor that is much the same as my land, would I be able to discuss a potential value with an appraiser acting as a consultant? If not, would I be able to discuss how I determined the value for myself based on local sales and they agree or disagree that my work was reasonably close to a conclusion that an appraiser would come to? Could they answer what the range for an acre of land would be in my general area?

TL:DR How restricted would an appraiser acting as a consultant be? What are the rules an appraiser follows in this situation? If someone was doing a private cash purchase, do the appraisals have to be formatted the same as a sale involving a bank with all the same rules?


3) Two of the comps were C3 condition and one was C4. My home is a C4. On 2k sq foot +/-, a C3 condition only gives a $6k boost in price(It was a -6k adjustment). That doesn't seem like much to go from average to near perfect. Is that pretty normal? How big of a difference does C2 give generally?

4) What can you guys mess up so bad that you would need $1m in insurance? Is that like accidentally knocking someone's house down/running them over or is that messing up an appraisal and getting sued for costing someone a lot of money?
Don't get mean on OP. Okay, OP, you have an option of ROV. That is a reconsideration of value. Talk to your lender. Ask them if they know what an ROV is? "reconsideration of value"
 

Norby

Thread Starter
Freshman Member
Joined
Apr 23, 2020
Professional Status
General Public
State
Florida
Norby,
I'm curious, why are you interested in the value of the site (or land)? Once a house is built on a property its not probable to be able to separate the two. Sort of like asking, how much are the wheels, tires, and brakes worth on a car.

The standard appraisal form requires appraisers to estimate the land value in the Cost Approach. Sometimes it is a valid alternative way to looking at the property's value. Some times appraisers estimate 'site value' with actual comparable land sales and sometimes by 'residual' methods, and sometimes you get goofy results.
I can't not understand things. It will haunt me forever. Seriously.

Two more practical reasons are I am from a different state. I'm trying to understand how my local values work and how appraisals work a little better.

Partially, I'd like to buy more land that neighbors mine and while I judged it almost exactly what mine appears to be worth per acre, I enjoy the knowledge.

I have acreage. One of my neighbors has said they would sell me some of their land but retain their home site.
 
Last edited:

Norby

Thread Starter
Freshman Member
Joined
Apr 23, 2020
Professional Status
General Public
State
Florida
Based on the op. I do believe they are tying to understand relationship between site adjustment and site value.
This is part of it. I'm going to be buying some more land and while I know what it is worth, I like understanding how it all gets calculated.

I get the feeling that rural properties would be harder to value due to comps.
 

Norby

Thread Starter
Freshman Member
Joined
Apr 23, 2020
Professional Status
General Public
State
Florida
Don't get mean on OP. Okay, OP, you have an option of ROV. That is a reconsideration of value. Talk to your lender. Ask them if they know what an ROV is? "reconsideration of value"
My appraisal came back where I thought it would and more than I needed. I'm happy. I just wanted a more in depth understanding of it.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Norby,
If you are buying more land from a neighborhood, I'd suggest getting a separate appraisal on the parcel of land you are thinking of buying. Using your single family report, which was intended for a different purpose (getting a loan on an existing house with site) is not a good idea. An acre of land, depending on zoning and the infrastructure to that land, can, and is probably very different that buying land to add to your homesite.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Most appraisers performing 1-unit appraisals are not routinely appraising parcels of vacant land, nor are they basing their opinions of land value on actual land comparables. It's far more common for them to work a cost approach in reverse on sales data involving properties with existing improvements. Usually, those sales are the comparables from the Sales Comparison. The process of working the cost approach in reverse yields the site value as a residual, which that's what these appraisers who are doing it this way are using in their cost approaches.

Not all appraisers do it that way, though. Some appraisers will actually look for land sales data and develop their opinions of the subject's land value that way. If so, they'll be showing some of those land sales data in their Site Value section above the Cost Approach summary. If you don't see any 1-liners or other references to vacant site sales data in that comment field then it means they didn't use site sales to develop that opinion of site value. If you see any reference to "site value by extraction" or the like it means they backed into their site values as I described in the first paragraph.

In the end, unless the subject improvements are new/recent construction or of unusual size or design or features then none of the buyers or sellers or brokers in the market are doing their own Cost Approach or using it as their own primary approach to value. That's one reason why probably most appraisers don't tend to take the Cost Approach too seriously.

In our business it's a cliche "Cost does not equal value".
 
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