High priced residential appraisal

[Anthony Blackburn]

One of the best pieces of advice I got as a new appraiser was "Appraise every home using the same basic techniques"

Utilize the three most similar, most recent, most proximate sales, just as you would in any other appraisal.

Of course, with a property that is "High End" for an area, this rule needs to be modified.

On your inspection, pay special attention to the unique features of your home. Many upscale homes have items of significant cost, that have a narrow degree of market appeal. Pink slab granite counters come to mind. Also, make sure tht the features of your home are appropriate for upscale homes in your area. For example, in my market and in LA, upscale isn't upscale until you are over 12,000 sf, have an elevator and a home theatre room. Other considerations for something very upscale include fine detailing and finishes. I recently had one in Saratoga that had cast bronze sculptures for entry doors. Just those alone were $250K in cost some 10 years ago, per the owner. But again, they would probably appeal to a very narrow market segment.
Don't forget to do the same with your comparables. Take the time to call and interview the listing agents for unique features and other considerations in the sale.

DO charge more. The fee of course must be based on the complexity of this report. How many slam dunk reports at $300-$350 could you do in the same amount of time that it will take to do this one.

Take lots of interior photos and then refer back to them when doing your descriptive commentary. The photos are a good way to take notes. Most lenders will require photos of "Above and beyond the call of duty" features and will require some of the inside.

Try to allign yourself with an experienced appraiser that will take a look at the report for you, before you send it out. Give them a small piece of the action for thier help and advice.

 

[Stone]

Hey Mark. I would think that if your property is on the west side, it shouldn't be too bad. I did one in the similar price range that was in the Town of Pleasant Springs, which was a pain. Hopefully it is in one of the western townships, Maple Bluff, or Shorewood. I've only done a few in this price range, and location really determines the difficulty level. Good luck.

 

[Frederick R. Ruffell]

Mark,
The complexity of the assignment is only part of the justifaction for a higher fee. The bulk of the justification, in my opinion, is your increased liability. A 5% error on a 100,000 value might cost you ( or your insurance Co.)$5,000 plus court and attorney fees BUT a 5% error on a 700,000 value might cost you ( or your insurance Co.) $35,000 plus court and attorney fees. Charge accordingly!!

 

[Restrain]

As to how to do the report, the previous posts have pretty much covered it. We do A LOT of $1M plus properties just because of our clientelle and the area. Provide site sales if you can to support your site value (Site value may exceed the usual 30% norm for custom homes..or it may be a minimal portion. Just depends). Then use comps that are comprable. If you don't recognize certain types of materials, take photos then go to Lowes, Home Depot, etc and do your research. For example, a tile floor may be man-made ceramic tile, limestone or polished marble - lot of price difference. The wood floors may be Pergo laminate, typical hardwood, or hand-distressed oak. Countertops may be Corian or equivalent, Silestone, or Granite. Look inside the cabinetry to see if it appears to be custom or prefab. The same with the baths, etc. Just take your time, and write a lengthy addendum to describe the home. It helps you in forming your opinion and making your adjustments.

As to the fee, here's a suggestion. If your typical fee is, for example, $300 and it takes you X hours to do it, and you think it will take you Y hours, use what you consider a reasonable comparison. At the same time, you can't reasonably charge for the "learning process" for learning about these large homes, so take that into consideration as well.

Roger Strahan, SRA

 

[Pat Butler]

When you bill your client for this assignment, just be sure you don't identify your increased fee as being for a 'high value' property. You don't want to tie your fee in with the value (USPAP 1070-74). Instead, just described this assignment as 'complex property.'

 

[Karl]

Mark, My bet is you'll do fine on this. Based on the fact that U were willing to ask a question PRIOR to starting.

 

[Blue1]

Good advice from all....one other thing....don't be tempted to make exclaimations about how awesome the home is when you're inspecting the property......that's "bad form." Go about your inspection in a calm manner just like you would inspect any other home. Take lots of pictures and lots of notes. Without being aloof or condescending, try to act like you see this type of home on a regular basis. Be relaxed, polite and, above all observative.

P.S. Somewhere on this Forum there's an article about "Trophy Properties" or a link to such an article......might be helpful.

 

[Tim The Enchanter]

don't be tempted to make exclaimations about how awesome the home is when you're inspecting the property......that's "bad form." Go about your inspection in a calm manner just like you would inspect any other home. Take lots of pictures and lots of notes. Without being aloof or condescending, try to act like you see this type of home on a regular basis. Be relaxed, polite and, above all observative.

Exactly. Err, maybe be observant. Save the exclamations for your friends and family. :lol:

 

[Mike Garrett RAA]

I think most have hit on the key word "Complex". My state makes says you must be a Certified Residential Appraiser for certain complex assignments. If $700,000 homes are common and comparables are readily available...go for it. We all had to start somewhere.

I liked what someone said about liability. A 10% error on a $150,000 house won't break you but now 10% of $700,000 is another matter. What does your errors and omissions insurance policy say? I draw the line at $1,000,000 since there are very few of these in my market.

Fees? Charge according to your time involved and perhaps a premium for higher liability. My breaking point is $500,000. The URAR is good for all types and price ranges of homes, just be sure to have good addendums and use more comps if necessary.