GXX001 Not Invoked After Work Completed

[MoistMitten]

I initially had an ARV appraisal that took into account the GXX001 exception as the house (shown in the link below) is 100% below grade. I sent the appraiser the discussion and they opted to not use the exemption. That is fine, but this changes the value from what I was anticipating especially taking into account price/sqft.

Essentially I'm looking for the proper way to counter this to have the value all on one line like it was in the ARV appraisal I had around 7 months ago.


https://appraisersforum.com/forums/threads/second-opinion-on-above-grade-vs-below-grade.233357/

If anyone has some input please share! I only get one counter opportunity to my understanding and the needed value is off by about 60k. IF I was to go based on price per sqft all on one line the estimated value would be around 565k instead of 445k.


Here is one example of a house that is similar to my property, be it 5 miles away (this lot is rural) For the initial ARV they used a property 8miles away

Comp shown below from the appraisal.




Comp thats more accurate for the given property.

5104 Joslin Lake Dr, Lyndon Twp, MI 48137 - 4 beds/3 baths

(REALCOMP) Sold: 4 beds, 3 baths, 1700 sq. ft. house located at 5104 Joslin Lake Dr, Lyndon Twp, MI 48137 sold for $565,000 on Sep 23, 2022. MLS# 20221037974. LAKE FRONT - 100' of frontage on Joslin Lake. Upd...

www.redfin.com

That property has the same bed/bath count as me, 100sqft less than mine, also a ranch. If they used the exemption it would be a comp.

If you need any additional information please let me know as I want to be thorough.

I can provide the appraisals as a DM since this is a public site.

 

[George Hatch]

Let me get this straight: you bought the home in mid-2022 for under $300k, the property having been listed for 3 months before you went under contract and the listing stating <400sf basement that's partially built out. And now you're upset that the appraisal didn't come in at $500k?

3 months of exposure for a listing means the property was well exposed at the reduced list price before you then entered into contract for $9k less than the list. So that right there demonstrates what the property was not worth in the market prior to you buying it.

I'm not criticizing your house or your judgement in buying it at that price. I'd live in that house (if I could survive the winters). But an appraiser working 9 months later on this property would have a lot of explaining to do for how they valued the home in 2023 for that much more than it sold for in mid-2022.

The house at 11662 sold in 07/2022 for $317k and it has 1763sf. How do you think that house relates to your's when compared to the house at 11821 Centerline which lists the 107ft of frontage and the 2018 remodel and 3ba?
Or the 3bd/1ba 1200sf house at 11586 Vassar with the huge lakefront lot and the 95% complete remodel that sold in 01/2023 for $307k?
Or the 4bd/3ba home of 2000sf + unfinished basement level at 11518 Riverbank that sold in 08/2022 for $410k?

And with this many sales right on the same lake, why is any appraiser going to the bigger/better lake 8 miles away for comps on this property? I'm not local to the area but even I can see that never would I ever.

 

[CGinMN]

ARV = After Repair Value

Is this a rehab loan?

 

[George Hatch]

Okay, but even 1700sf will only cost so much to remodel.

 

[MoistMitten]

Let me get this straight: you bought the home in mid-2022 for under $300k, the property having been listed for 3 months before you went under contract and the listing stating <400sf basement that's partially built out. And now you're upset that the appraisal didn't come in at $500k?

3 months of exposure for a listing means the property was well exposed at the reduced list price before you then entered into contract for $9k less than the list. So that right there demonstrates what the property was not worth in the market prior to you buying it.

I'm not criticizing your house or your judgement in buying it at that price. I'd live in that house (if I could survive the winters). But an appraiser working 9 months later on this property would have a lot of explaining to do for how they valued the home in 2023 for that much more than it sold for in mid-2022.

The house at 11662 sold in 07/2022 for $317k and it has 1763sf. How do you think that house relates to your's when compared to the house at 11821 Centerline which lists the 107ft of frontage and the 2018 remodel and 3ba?
Or the 3bd/1ba 1200sf house at 11586 Vassar with the huge lakefront lot and the 95% complete remodel that sold in 01/2023 for $307k?
Or the 4bd/3ba home of 2000sf + unfinished basement level at 11518 Riverbank that sold in 08/2022 for $410k?

And with this many sales right on the same lake, why is any appraiser going to the bigger/better lake 8 miles away for comps on this property? I'm not local to the area but even I can see that never would I ever.

This was a rehab loan and we went from 3b 1bath to 4 b 3bath and finished the lower level (650sqft). New appraiser measured it at 1800sqft total... Question is not regarding those comps but rather the value of the lower level. I showed a 1:1 comp above showing the demand for the additional bath and bed. Easy over 500k from what I see for a 1700sqft ranch on the same lake chain.
Also to answer your question regarding 11821 Centerline its 30 ft shorter in lake front and 184Sqft smaller with one less bedroom.

11662 was also a colonial and not a true rep of value as this was an auction.
11518 Riverbank was not 2000sqft it was 1,744Sq with a basement.

@CGinMN Yes it was.

@George Hatch Yes that is true, but I bought it in a distressed condition.

 

[CGinMN]

Regardless, the problems aren’t the result of which line the appraiser made the adjustment on. It sounds like you had two different appraisals, there was an a difference of opinion, the market changed, and/or the remodel changed. I still don’t really gather what’s going on, it would take reviewing the appraisals and the construction documents.

Why don’t you pay a local appraiser $500 to consult on this? They’ll review the reports and help you write an ROV.

 

[George Hatch]

So how much is your budget for the remodel?

 

[MoistMitten]

So how much is your budget for the remodel?

Total about 80k diy put into it. Large master bath shower with a herringbone pattern, 72in double sink vanity with mid century modern though out the baths. Remodeled one bathroom with vertical tiles same style, added a full bathroom downstairs same finish. New floors, new roof, new mini split / heat pump combos that are in each bedroom and large room, Added natural gas fireplace in the old log burning one and updated the surround, ACTUALLY finished the lower floor to the same grade as the first floor as before it was outdoor carpet and block walls. New kitchen, new floors on main level. New lights, new electrical throughout new electric box, added EV charger, and all are upper end finishes.

My main question comes from the exemption and the difference between the above and below grade areas are valued at. If there is no difference then I would think that the price per sqft referenced would be difference than whats shown.

@CGinMN That might be a good idea to adjust the value IF you think that there is a difference in value between above grade vs below grade pricing.

 

[George Hatch]

Okay, so a general rule of thumb with remodels and major fixers is that you can multiply the costs by 1.5x to 2x to get to the ARV. The high side goes with the hot market and the low side goes with soft markets. That multiplier is comprised of the hard costs plus contingencies plus investor profit margin. (because nobody works or invests for free)

In that manner, $80k x 2.0 = $160k + your acquisition price.

 

[MoistMitten]

Okay, so a general rule of thumb with remodels and major fixers is that you can multiply the costs by 1.5x to 2x to get to the ARV. The high side goes with the hot market and the low side goes with soft markets. That multiplier is comprised of the hard costs plus contingencies plus investor profit margin. (because nobody works or invests for free)

In that manner, $80k x 2.0 = $160k + your acquisition price.

Correct if that is for paying a contractor to do it. General rule of thumb with contractors is to double the material cost so 160k. Then you take that and multiply by 2 and get 320k + acquisition price. Right? Or are you saying that DIY it doesnt matter that its only material price?