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Is There A 20% Rule On Sqft Adjustments?

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chas

Freshman Member
Joined
May 21, 2017
Professional Status
General Public
State
California
I am a Veteran trying to purchase a property in a small gated community. Prior to Dec, sales were slow; suddenly the market has had sales within 10 to 21 days of a property being listed. The problem is, the townhome I am buying has 1374 sqft has comps from Dec from $214K to $238K. No other townhomes with this sq footage have since been listed for sale. One townome with 361 more sqft closed 7 days before the appraisal at $265K; but appraiser refused to use that comp and adjust for sqft difference telling us it has more than 20% more sqft than subject. BUT the subject property is waterfront/waterview and none of the comps including the one for $265K have that. My offer price was $240K which I felt was a fair price if another property sold for $265K a week earlier with 361 sqft and had not view whatsover & backed up to a parking lot. So is there a hard fast rule in USPAP that absolutely states an appraiser cannot pic a comp with sqft 20% more than subject. I had to cancel escrow & lose the cost of appraisal and home inspection because she came in at a value of $210K using two old comps from Dec 2016 and one from Oct 2016 vs one in Dec at $238K and the one at $265K that had 361 more sqft. We asked VA to reivew the apprisal and ask why appraiser did not use a recent comp of $238K and they gave no answer except stating that appraisal stands. So is there a hard fast rule of 20% that can't be broken? Any ideas on what to do??? Thank you :)
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
No such rule but typically not recommended unless there are no other comps. Lender internal reviews typical ding appraisers for it.
 

CindyR

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
No. These is no such rule. The appraiser must analyze the most recent and similar sales which are available. If there are significant differences the appraiser must evaluate these differences. The VA appraisal process includes a specific Reconsideration of Value protocol. Did you specifically submit an ROV request? You should have gotten a written reply explaining why the new information you submitted was not relevant. You might contact the VA Regional Loan Center (located in Phoenix) which covers California loans.
 

chas

Freshman Member
Joined
May 21, 2017
Professional Status
General Public
State
California
No. These is no such rule. The appraiser must analyze the most recent and similar sales which are available. If there are significant differences the appraiser must evaluate these differences. The VA appraisal process includes a specific Reconsideration of Value protocol. Did you specifically submit an ROV request? You should have gotten a written reply explaining why the new information you submitted was not relevant. You might contact the VA Regional Loan Center (located in Phoenix) which covers California loans.
Thank you! Yes I sent a letter with enclosures to Phoenix and all we got back was that 1 line refusal to change value with no explanation as to why a recent comp of $238K was not used over an older & lower one that was identical to the $238K comp. Very frustrating. I'm now going to write to Head of VA.
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
Did the appraiser comply with Tidewater by corresponding with the POC, stating the contract price appeared to be unsupported by the comparables? If so, the Tidewater process should be documented in the appraisal report.
 

CindyR

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
You might google 'VA reconsideration of value' to pick up some language and buzz words that might be helpful. i got 3 pages of results!

When i respond to an ROV i include the decision and response and logic and explanation as an addendum to my original report. That way everyone knows why i think the new comps are not relevant and why i believe the original comps are the best indicators of value for the subject. if you just got a one line reply from someone i don't think a proper ROV was actually performed.
 

chas

Freshman Member
Joined
May 21, 2017
Professional Status
General Public
State
California
Did the appraiser comply with Tidewater by corresponding with the POC, stating the contract price appeared to be unsupported by the comparables? If so, the Tidewater process should be documented in the appraisal report.
Hello!. No there is no such mention of this on appraisal report. She picked a comp of $205K & $214K from December 2016, ignored a $238K comp from Dec 2016 that was identical to the two low ones and for the 3rd comp went back 8 months. She says in her report she would not consider the $265K comp that just sold because it had 361 sqft more than subject which is more than 20% difference even though it too was a 2+2. And again, VA Phoenix gave no explantion as to why they would accept an appraisal that did not use the $265K comp & especially the $238K comp that was identical to the ones the appraiser did use
 

chas

Freshman Member
Joined
May 21, 2017
Professional Status
General Public
State
California
You might google 'VA reconsideration of value' to pick up some language and buzz words that might be helpful. i got 3 pages of results!

When i respond to an ROV i include the decision and response and logic and explanation as an addendum to my original report. That way everyone knows why i think the new comps are not relevant and why i believe the original comps are the best indicators of value for the subject. if you just got a one line reply from someone i don't think a proper ROV was actually performed.
Thank you!
 

Dean

Senior Member
Joined
Oct 16, 2003
Professional Status
Certified Residential Appraiser
State
Tennessee
Thank you! Yes I sent a letter with enclosures to Phoenix and all we got back was that 1 line refusal to change value with no explanation as to why a recent comp of $238K was not used over an older & lower one that was identical to the $238K comp. Very frustrating. I'm now going to write to Head of VA.
You wrote to the RLC, and they sent back the one line refusal? Or, to the appraiser? You need to contact the lender and do a ROV.
 

chas

Freshman Member
Joined
May 21, 2017
Professional Status
General Public
State
California
You wrote to the RLC, and they sent back the one line refusal? Or, to the appraiser? You need to contact the lender and do a ROV.
Hello. Yes. Lender and I first contacted the VA appraiser who did the appraisal. She told lender she did not want to have any data sent to her challenging the value. So according to VA Procedures, we then had to contact VA Phoenix Regional Loan Center. After waiting 12 days, we got a 22 word statement stating comps support ROV, no support to change value. Request denied. Nothing was said as to why they accepted an old comp vs new comp, why NO VALUE whatsoever was given to the waterfront/water view property and much more. One appraiser in this thread even states she believes a authentic ROV was not performed because I should have got documentation to substantiate their decsision. So it's really terrible that the people there you sought help from did nothing and now don't even return my calls or emails when I ask for explanations and documentation that supports their decision which basically goes against standard appraisal guidelines. Meanwhile, I'll probably lose the house I wanted by the time anything happens. I can't believe this is how VA treats veterans.
 
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