one bedroom

[jgirl3003]

Hi - i am not an appraiser, but a person selling a house. i hope you can answer some questions, or point me towards some links that will help me.

i am selling a remodeled one bedroom house. I put it on the market and took an offer. but the buyer could not get the mortgage because it not appraised for the selling price. the reason given was because it was a one bedroom.

my questions are:
why do one bedroom houses appraise for so little?
why can't they be compared to similar square footage houses? (a two bedroom house where the bedrooms are 7x10 and 9x10, my one bedroom is 14x24)
why can't they be compared to lofts in the area selling for 2x as much?

i am not in the industry, so i do not understand these things, and am looking for answers, not arguing.

i am also looking for ways to get it appraised for more - the appraiser apparently said that if it was 2 bedroom it would appraise for more. the one bedroom has a lofted ceiling - how would i make it 2 bedroom? would a partition work?

it is totally remodeled with anderson windows, all new drywall, new appliances, new kitchen cabinets, new bathroom...

if it helps, i am in pittsburgh, pa.

thanks for any information you can give me, and thank you for your time.

 

[Mike Boyd]

Without looking at the comps used and the respective MLS printouts, I cannot give you an answer. BUT, if there was a useable loft with a regular stairway, I might call it equal to a standard 2 bedroom.

 

[jgirl3003]

well, there isn't a loft... the house consists of 2 floors - the first floor is the living room/kitchen (14x30 - one large space with a central chimney) and the 2nd floor is one large space with a cathedral ceiling, which is 14x24) so it is a one bedroom, but it would be similar to a "loft" type condo or apartment.

i hope that makes sense...

 

[jgirl3003]

oh - let me explain better.
the house has 2 floors - both are open spaces.
the first floor is 14x30 and has the living room and kitchen.
the second floor is 14x24 and is the "one bedroom"
(the bathroom is on the first floor and is an addition out the back)
this house is freestanding in the city, frame construction, nice neighborhood.

most houses are 2 stories plus a finished attic.
most houses my size have not been remodeled and are 2 or 3 bedrooms on the 2nd floor - I bought mine as a 3 bedroom - 2 of the bedrooms were captive and 7x9 feet. this is why there are no comparable.


i do not have the report yet... just that it wasn't appraised for the asking price because they can't find any one bedroom comps....

 

[Mztk1]

With a 10 X 24 room, a partition down the center could work as long as there is a place for two separate entries to both bedrooms.

Normally, if I am appraising a one bedroom house I look for a way to convert it to a two bedroom because I know in my market a one bedroom house has a functional inadequacy problem. If the effect on value is more than the cost to add a partition and an extra door, I could compare it to two bedroom houses and determine a functional inadequacy based on cost.

If not and there is no way to partition in a workmanlike manner, which may be the case with the lofted ceiling, I may be forced to calling it a one bedroom house and comparing it to other one bedroom houses that cannot get a second bedroom easily added.

 

[jgirl3003]

i just got the actual report - and am surprised that the condition is listed as "average" when in fact everything inside the house is brand new and immaculate. I am also surprised that it is listed as having no energy efficient items - do they not count windows and appliances, insulation and newer boiler? (2004)

one of the comps was the house next door which needs a new furnace, has old kitchen appliances, no laundry, and an unfinished third floor.

so, is the only thing taken into consideration the number of bedrooms when appraising a house? it seems like it from this appraisal.

i am confused.

 

[KD247]

The appraiser should be looking at your property through the eyes of a "typical" buyer as they form their opinion of your property's value. When a property has unusual characteristics, it makes it harder to know how that typical buyer might relate to it.

The data included in the report, including the notation of average condition, is relevant mostly in the way it relates to other properties involved in recent market actions (sales and listings) and should ultimately result in a conclusion that shows how your property relates to those properties. Hopefully, there is enough data to show that your property is just slightly superior to sales in one price range and just slightly inferior to sales at somewhat higher prices.

When it's not clear where your property ranks in relation to recent sales (for instance, if there are no recent sales of generally similar properties) the job becomes much more challenging with increased likelihood that different appraisers will have differing opinions.

There's no fixed rule for computing the value of a bedroom. I've seen fast sales of large multi-million dollar homes with only one bedroom and I've seen properties that had to be significantly discounted because they only had three bedrooms. It all depends on the market in your area.

 

[jgirl3003]

thanks KD247 - the insight you provided is helpful.

i have talked to 2 appraisers about this - one said don't do a thing to the property because from the photos and initial research he thought a higher price could most certainly be justified, especially if i got another buyer at the same price. his thought was that it would just take work to find comps, perhaps going into other neighborhoods because off the uniqueness of the property. he looked at the photos, the location, and spent a good while talking to me.

the other appraiser said to make it into a 2 bedroom, even though it has lofted ceilings - he said the walls don't need to go to the top. "as long as it has a door and a closet, that's all that matters" then he said to raise the selling price because it will appraise for more. he didn't see or ask for photos of the place.

the property is unique. i think i'm going to stick with the first guys opinion. he couldn't guarantee a higher appraisal, but the house as it is - is really cool and while unique, i think it is highly marketable. it received an offer in 10 days, and now that it is back on the market, 2 people have already called to see it.

adding a second bedroom would make the space very awkward and in my opinion ugly and unusable. and technically, i believe it would still be considered a den/study and one bedroom, unless i made 2 rooms with 2 doors and 2 closets, correct?

 

[Mztk1]

Well I for one, the next time an appraiser comes knocking, would plant the seed in his or her head by mentioning how easy it would be to convert the area to two bedrooms.

The condition of the property is relative to the market, but if your house is as superior to the house next door as you say, then a condition adjustment would likely have been warranted. It would have been incumbant upon the appraiser to find a house similar in condition as yours in order to extract a market reaction. Easier said then done at times, but if he is going to do his job right he will sometimes have to take extra time to prove or disprove the need for an adjustment.

 

[PropertyEconomics]

Well I for one, the next time an appraiser comes knocking, would plant the seed in his or her head by mentioning how easy it would be to convert the area to two bedrooms.

The condition of the property is relative to the market, but if your house is as superior to the house next door as you say, then a condition adjustment would likely have been warranted. It would have been incumbant upon the appraiser to find a house similar in condition as yours in order to extract a market reaction. Easier said then done at times, but if he is going to do his job right he will sometimes have to take extra time to prove or disprove the need for an adjustment.

Again Mr Klos we disagree. It is a one bedroom home and for you to say you find ways for conversion avoids what is there.
Let the market be the guide and find one bedroom sales, they are there, they are just harder to find.
An appraisers personal feelings should never come into the appraisal of real estate but rather their intrepretation of available market data should be undertaken. My suspicion is that the original appraiser also thought one bedroom homes have less value. As our society ages, Im finding this to not always be the case.
Let the market dictate the value.