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No Split-Level Comps.what would u use?

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MandTDean

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Freshman Member
Joined
Oct 9, 2007
Professional Status
Banking/Mortgage Industry
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Pennsylvania
Thank you in advance to anyone willing to give me an opinion on this!

I posted about myself in the introduction section if you would like some information on my backround.

I received an appraisal on Friday for a refinance of a split-level home. I should mention that I did the new construction mortgage for this property in 2005. Since this was a two time close, another appraisal was performed 7 months later. I referred this customer to our home equity loan division six months ago for a second mortgage and a third appraisal was done at that time. I am pretty familiar with the property!

The appraiser indicated that there were no split-level comps within the township. He defined the neighborhood as a one mile radius of the subject. I should mention that this is a 3BD/2BA home with an attached two car garage. The appraiser chose to use bi-level comps in the absence of split-levels.

All of the bi-level comps used had 24-30% less GLA than the subject. In addition, they had little to no finished below grade area. All had garages, but were built in, (either one or two car) to the unfinished below grade area and not attached to the home. Though these bi-levels had 24-30% less GLA, the GLA adjustment never exceeded 5% of the market value of my subject.

My contention is that similar comps would have been traditional or two story comps. A quick check of Cyberhomes.com showed seven homes of this style within the defined neighborhood. All were 3BD/2BA with attached garages and had market values averaging 15-25% higher SP than my subjects value.

I mentioned that I am familiar with this property. The new construction appraisal came in 5% higher two years ago. The finished value came in 13% higher and the HE appraisal came in 23% higher than my new value. The appraiser defined one unit housing trends as stable, in-balance with 3-6 month marketing time. Declining values cannot explain this.

Before disputing this with my appraisal management company, I would like to know if you feel I have a valid argument, or I am off base. If I can provide any additional details, please let me know. I look forward to hearing from this informative crowd!

Edit: I have added the subject front and side view along with one of the comps for clarification. No below grade finished area was included with the subject or the comps in square footage calculation.
 

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Last edited:

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Dean, it would be helpful to ascertain what Style "Split-Level" home the subject is.

i.e. Contemporary Split Level, Colonial Split Level "Splanch", Split Level RANCH

would also be helpful to post a pic of the subject

Often, Split Level Ranches demonstrate varying configurations (as do Raised Ranches)

1 story - two levels GLA above grade either on slab, crawl, full, or partial basement - detached garage

2 story - three levels GLA above grade - typically FAM RM adjacent to attached garage, LR, Kit second level, bedroom bath suite third level. THIS design is usually on a slab (all 4 walls above grade) with either slab or crawl or partial bsmt under LR/KIT LEVEL.

RE: Bi-Levels - the "war" continues between ABOVE GRADE and BELOW Grade

Raised Ranch - Lower Level is a partial basement half or fully below grade which should be segregated from Above Grade GLA.

BiLevel - is a Raised Ranch constructed fully ABOVE grade on a slab.

Refer to ANSI and Fannie guidelines.

CAVEAT: the determination of whether to include partially above grade finished living area (finished insulated heated to similar quality and utility as upper level) MUST BE determined by the local market. Ansi and Fannie guidelines are guidelines....... analysis of the local market (including expanding the geo area to immediately adjacent sections of the town) and utilizing Actives, Contracted Sales, and Dated Sales (over 1 yr), is IMO a must if no more recent closed ACTUAL Split Level Ranches or Split Levels (fully above grade) sold within the prior year.

Also note: in many markets neighborhood drive-thru will illustrate whether the MARKET indicates any STYLE OR DESIGN preference demonstrated by local Buyers.

As you posted - in my markets there is customarily a buyers premium paid for TRUE two story homes with ALL 4 walls of GLA ABOVE GRADE. MLS and local agents routinely inflate GLA on Split Level ranches by including finished basements in LP/SF. However, the most ethical, and the most successful $$$$, categorically ALWAYS segregate above and below grade area on listings with comments on listings akin to"

"Estimated SF does NOT include finished basement"

Many Local Assessors took the position approximately 10 yrs ago that (direct quotes) ......"if they [agents] are going to list and sell them with the inflated GLA - then I'm going to TAX them accordingly".

If the lower level finished area in your subject is below grade - it should be segregated; if finished to similar quality and condition as the one or two levels above grade - adjustments equal to the GLA adjustments would be appropriate IF demonstrated by the market.

As with all, It depends on the Market.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Dean - Split Level what........ ? Ranch, Contemp, Colonial?

Suggest clicking on EDIT POST, then GO ADVANCED, the attaching PHOTOS
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
...
All of the bi-level comps used had 24-30% less GLA than the subject...



BIG "red flag"...particulary when houses with GLA more than the Subject exist.

Each situation is--of course--unique and there MAY be good reasons for the selection and analysis of the sold data. But, then again...
 

Ariba

Senior Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Colorado
The appraiser indicated that there were no split-level comps within the township. He defined the neighborhood as a one mile radius of the subject. I should mention that this is a 3BD/2BA home with an attached two car garage. The appraiser chose to use bi-level comps in the absence of split-levels.

No split level ever in the township, or none that have sold in the past 6-12 months? He could go back further in time. Also, I hate to say it but many Real Estate Agent do not know the difference between Split Level, Bi-Level, Front-to-Back, and 4-Level. Could it be that the MLS descriptions are misleading? Did the appraiser call any Real Agent familiar with the Township?

All of the bi-level comps used had 24-30% less GLA than the subject.

Red flag. What did the appraiser base his/her GLA adjustment on? Paired sales analysis?
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
"Before disputing this with my appraisal management company".

That might explain the problem :)

All kidding aside, like the others said, we need more info about the split level. How many levels does it have, how many are considered above grade, etc. Are the bi-levels truely bi-levels or are they split foyers. The GLA differences are a problem. Usually, if there truely are not split levels available, we usually pick comps that will match up with the GLA the best. For example if you have a four level split, with two levels above grade, than rambler style homes with a full basement would be a good comparison. But if three of the levels are considered above grade, then maybe a colonial would be better to use, etc.
 

Michigander

Senior Member
Joined
Oct 23, 2003
Professional Status
Certified Residential Appraiser
State
Michigan
Is the subject the first picture? Looks like a tri-level. What State and County or City?

Thanks
 

MandTDean

Thread Starter
Freshman Member
Joined
Oct 9, 2007
Professional Status
Banking/Mortgage Industry
State
Pennsylvania
Is the subject the first picture? Looks like a tri-level. What State and County or City?

Thanks

Yes Serena, the subject is the first picture. The other two pictures were comp one and two.

These are located in Dauphin County PA. All within the vicinity of Halifax or northern Dauphin County.
 

Frederick

Senior Member
Joined
Nov 2, 2005
Professional Status
Certified General Appraiser
State
New Jersey
So the questions appear to be;

1. Does the market differentiate between split level homes and bilevel homes with similar characteristics?

2. Why didn't the appraisal cite sales which bracket above and below grade finished area

Answer 1. If it were me I would have found the last sale of a similar split level home and then compared it to a contemporaneous sale of a bilevel like ones cited in the appraisal. If that comparison revealed a measureable market reaction that indicated one design was more desireable to the market than the other then I would translate it to a percentage and apply it to the comparable sales cited in the appraisal.

In the absence of a split level sale I would cite bilevels as your appraiser has with careful consideration to finished area above grade and finished area below grade. In my market traditional two story colonials typically yield a much different value per S.F.. If I cited a colonial sale, I again would isolate market reaction to a similar split level sale compared to a contemporaneous sale of a traditional colonial and apply the percentage as an adjustment in the appraisal.

Answer 2. The cited comparable sales should bracket the the Gross Living Area of the subject. Because all of the bi-level comps used had 24-30% less GLA than the subject they do not provide a supported and defensible valuation analysis.

The appraisal failed to note the finished living area (S.F.) below grade because there really is no reliable source for this. People very often finish the below grade area without permits so public record is not reliable for this feature. Sometimes what they call finished is really painted floors and walls, no finished ceilings. It would be more reasonable to analyze the MLS descriptions of below grade finished rooms and approximate finished area as fully finished, partially finished or unfinished or as percentages after consulting with the listing agents.

In Summary

Because the appraisal in question fails to bracket the Gross Living Area and also fails to cite sales which have approximately the same percentage of finished below grade area it fails to provide a fully supported and defensible opinion of value. Because all cited sales have Gross Living Area that is 24-30% less GLA than the subject the opinion of value is likely to be understated.

Unfortunately by using an Appraisal Management Company it would be difficult to communicate what you require to the appraiser and it is very likely that the appraiser would be unwilling or incapable of preparing that time of analysis. Because of the low fees paid by AMCs to their contracted appraisers you often see the work being done by unsupervised trainees with a licensed appraiser signing off even though he never left the office.

You could always get a review or a 2nd appraisal done by a local guy, telling him your concerns and then tell the AMC to reconcile the two.
 

MandTDean

Thread Starter
Freshman Member
Joined
Oct 9, 2007
Professional Status
Banking/Mortgage Industry
State
Pennsylvania
Thank You

Thank you all for your insights!

I believe I have enough to discuss my concerns with our AMC. This appraisal was done with the assistance of two trainees. Not that this should matter, but I did not feel the right amount of research was put into this.

I will let you know how I make out, and thanks again for your input!
 
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