Low Home Appraisal/Questions

[btalbott]

I just received a copy of my home appraisal from a potential buyer. We had negotitated a contract price of $315k. The appraisal came back low at $280. Now off to the questions:

1. One of the homes that he used for a comp was a home that had been bought by Cartus (relocation company) for $332, then sold for $280. This house was comparable to mine, however; in my opinion they were trying to offload it and not worry about carrying it on their books.
2. The other two comps I'm not going to disagree with as they have been sold in the past several months.

Herin lies the problem. A more comparable home (one that was being sold by the homebuyer and not the relocation company) was sold 10 months ago for $310.00

I have an inground pool, privacy fence, whole yard sprinkler system, well, safety fence around the pool and approximately $24k in landscaping. Now I know this is general and I'd never anticipate getting back what I put into the house, but I believe the home that sold for $310k was a better comp since it's the only other home in the neighborhood that sold with a pool.

The appraiser gave me $10k for all of those upgrades. Again, I believe that the first comp skewed the numbers dramatically.

There are also numerous other errors on the appraisal (not crediting for those items, or crediting items to a comp that never had them).

Unfortunately I don't have any recourse because the buyer will not allow me to get a 2nd opinion on the appraisal.

Should the Cartus sale be allowed as a comp? Perhaps the appraiser didn't know this information at the time he appraised the home.

Tks.

 

[Mike Kennedy]

Buyer will not allow.........

Based on your comments above..... no reason why you as the seller cannot hire an experienced LOCAL Certified Appraiser to perform a Review Appraisal on that report. Yes you will pay for it. With thousands of bucks on the line........ cupple hundred to ANSWER those questions you posted...... by verifying whether the original report was compliant with the USPAP (Uniform Standards of Professional Appraisal Practice) or not. This requires the Review Appraiser to "line by line" "box by box" .....confirm compliance. This also requires confirming the data on subject and any comparable sales utilized.......** including terms of sale. If in fact, the relo co. "dumped" that low sale.......... then, in the absence of ANY OTHER competitive sales.......it would most likely have required a positive adjustment for any CONFIRMED discount at the time it resold. Caution - 1 sale does not make a market. Caution 2 - improvements may, or may not, have Contributory Value equal to, more than, or less than their Cost. The contributory value of your additional improvements must be demonstrated by the market (in the appraisal).

Supposition will not solve your dilemma. Expertise will. Strongly advise obtaining a Second Opinion yourself.

 

[btalbott]

Ok, lets say I get a second opinion. The mortgage lender won't accept that will they? I thought they had their own list of appraisers that they use.
Now, of course I'm emotional, but I believe that the dump of that one home can have a negative impact on the overall appraisal of the property.
Most other homes are going from 270-280 right now, but with no pool, no sprinkler system, no fence, no landscaping, no well, etc. It just seems to me that the values that were assigned to those additions were extremely low. What does an appraiser use to determine what these are worth?

Tks
Oh, the 1st appraiser was a local appraiser. Not sure of his experience level....I also offered to pay for the 2nd appraisal but the buyers refused.

 

[Ariba]

I just received a copy of my home appraisal from a potential buyer.

Did the buyer or a mortgage company hire the appraiser? If the buyer hired the appraiser the buyer is using the appraisal as leverage/negotiations for you to lower the price. If you feel that the appraisal is skewed don't sell to this buyer.

As you stated, relocations usually need to be unloaded in +/- 120 days. Therefore, as general rule appraisers do not like to use relocations unless it is another relocation or no other recent sales are available.

Do you know the average day on market for a house in your market? What does your real estate agent say?

 

[btalbott]

The mortgage company ordered the appraisal. Cartus bought the home in 7/2006 for $332,500 and sold it 3/2007 for $280.00
I guess what's really got my goat is the fact that I only received so little $$ for all the things I've done to the property. The builder is selling new homes at $280 with nothing but the house.

Is there some method that is used to determine what a pool is worth, a fence, well, sprinkler system, gutters, etc?

Tks

I believe average DOM is ~ 160 days. Mine went under contract in around 5 weeks, but that is a mute point now.

 

[murray stroupe]

Re;Review

Buyer will not allow.........

Based on your comments above..... no reason why you as the seller cannot hire an experienced LOCAL Certified Appraiser to perform a Review Appraisal on that report. Yes you will pay for it. With thousands of bucks on the line........ cupple hundred to ANSWER those questions you posted...... by verifying whether the original report was compliant with the USPAP (Uniform Standards of Professional Appraisal Practice) or not. This requires the Review Appraiser to "line by line" "box by box" .....confirm compliance. This also requires confirming the data on subject and any comparable sales utilized.......** including terms of sale. If in fact, the relo co. "dumped" that low sale.......... then, in the absence of ANY OTHER competitive sales.......it would most likely have required a positive adjustment for any CONFIRMED discount at the time it resold. Caution - 1 sale does not make a market. Caution 2 - improvements may, or may not, have Contributory Value equal to, more than, or less than their Cost. The contributory value of your additional improvements must be demonstrated by the market (in the appraisal).

Supposition will not solve your dilemma. Expertise will. Strongly advise obtaining a Second Opinion yourself.

=====================
Good one Mike, buyer doesn't like the 2nd appraiser idea;
so get the first one reviewed.

Even if that FLA market does not pay for any of his improvements;
the fact that Ron's rebuke on using relocations,
-----------------------------------------
& $24,000 worth of landscaping would make me get a review,asap.

Disagree you r much shorter than average DOM is a moot point, unless you are already irrevocably closing it. Sounds like the MB customer's is trying to pick up a cheap home with ''free landscaping''. Not an appraiser ,but buyer of real estate for 21 plus years approximately. Keep us posted

 

[redfish]

You don't have to sell. The loan the buyer is attempting to qualify for will not get funded. Find another buyer.

 

[Ariba]

The mortgage company ordered the appraisal. Cartus bought the home in 7/2006 for $332,500 and sold it 3/2007 for $280.00
I guess what's really got my goat is the fact that I only received so little $$ for all the things I've done to the property. The builder is selling new homes at $280 with nothing but the house.?

Cartus bought what house? The comparable?

Most home buyers prefer a new house to a newer used house. Also, the builder might be giving seller concessions and/or teaser interest rates that you don't know about.

Is there some method that is used to determine what a pool is worth, a fence, well, sprinkler system, gutters, etc?.

Yes, finding houses with similar amenities.

 

[btalbott]

Ok, what if a comp does not have those amenities? Then how does one determine what everything is worth?

 

[MARK JOLLIFF]

You mention a comp sold 10 months ago for 310. In this market 10 months is a long time. Prices in some area's are dropping rapidly. I'm in California so I cannot comment on your market specifically but a 10% drop in 10 month's is totally possible. also check to see what similar homes are listed for. If a home similar to yours is sitting on the markets for months at 300k then that says it's priced to high. Also keep in mind one of the things homeowners don't understand or have a hard time accepting is "cost does not equal value". Homes in my area sell for 500k to 700k. I could do a 200k kitchen remodel but that doesn't mean someone will pay me for it! Appraisers get their adjustments by comparing sales of homes with similar amenities to the subject against homes without those amenities. For example in your case the appraser would compare 1000 sq ft homes that have a pool with 1000 sq ft homes without a pool and determine if there is a difference and how much. Of course that is a simplified way of explaining it as often times other factors are taken into consideration. it's called paired sales analysis. Generally speaking most of Floridas housing market appears to be very hard hit and 10 months is a long time for values to change. Good luck to you and get that appraisal reviewed or get a new appraisal done by a local appraiser that comes recommended by someone you can trust.