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previous appraisals more than my opinion

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davidcrosley

Freshman Member
Joined
Feb 7, 2003
How many of you have to deal with this and what do you do?

2500s.f. house with 2500s.f. basement 95% finished
upscale neighborhood without seeing the property, comps support (+-) 725K
appraised one year ago for 730K
property values are increasing 3-5 percent per year
I got to see the old appraisal and appraiser used comps with 4000s.f. above grade and partially finished basements between 1500-2000s.f.
Get this, appraiser combines basement and above grade living areas in the GLA and states
"All three sales and the subject have walkout basements which in this market area when finished are marketed and percieved as living area. Basements have therefore, as is customarey in the area, been included in living area."

This appraisal was obviously stretched but have any of you heard of including basements in GLA? IMO it may be just as nice but it's still cheaper to build and in most cases at least one side if not three are underground.

I've had several situations like this lately i.e. my value is less than previous appraisal and I thinks I'm losing clients for it. It's slow now so I don't know for sure.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
David, I see the same problem A LOT in my area. Just because this is a mountain area, RE agents (and many others) include the Bsmt's in the GLA. I have gone round and round about this with agents, LO's, and other appraisers. But I just point to the definition of GLA, and do my job the way I know is correct. Like you said, usually when I see it done this way in an appraisal, it's to streeeetch for value.
 

Phil Rice

Member
Joined
Apr 22, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
David, how confident are you?

The market value of the subject is not based on what some appraisal text says about the definition of GLA. ANSI standard is only meaningful if it is “generally accepted”. You state that basement is cheaper to build, and I would submit that 9 times out of 10, cost does not matter.

What does matter? You know the answer! How much is the market willing to pay for finished walk out basement?

Have you got 3 good comps with 95% finish walk out basement, quality similar to the subject? Are you confident that the prior appraiser had better comps available and ignored them? Do you have a copy of the appraisal from a year ago?

And the $64 dollar question is – if the subject were listed today with a local realtor, would the listing indicate GLA of 4,000 sq ft, and would it sell for $730 plus 4% ? Or would the listing say 2,500 sq ft with finished walk out basement?

If you have lots of experience in this neighborhood/area, and you are confident that you have a good “read” on how the market would treat the subject basement, then prepare your report accordingly.

What to do about the other appraisal? Based on what you have said so far, my advice is to do nothing.

If you have 3 good comps (recent sales) that demonstrate the value of the subject basement, you should use them. You might consider a 4th comp using one of the same sales from the old appraisal. You are in control of how comp #4 is presented in your report. You can list the GLA and basement the “correct” way in the sales grid, make a 4% time adjustment, and it should then support your value conclusion.

FWIW – I have worked in Denver and Boston, and I find comp basements to be a challenge. I try to call one or both of the realtors involved in the transaction, and ask them to tell me about the basement. It can make the comp search a slow process.
 

davidcrosley

Freshman Member
Joined
Feb 7, 2003
Phil,

Thanks for the input. To answer your questions yes I have the appraisal from a year ago.

I have pulled comps from now and from that time.

Let me summarize roughly.

Now
5 comps, 2400-2800 s.f. above with "fully" finished basements.
Prices range from 600-740

tons of comps 2Story 3500-4000 s.f. above grade with 1000-2000s.f. below varying levels of finishing. Prices range from 780-919

Then
4 comps, 2300-2800s.f. above with "fully" finished basements
Prices range from 550-680

8 comps 2story 3500-4000 s.f. above grade with 1000-2000 s.f. below, varying degrees of finishing. Prices range from 680-810

What the previous appraiser has done is pretend that the subject has 5000s.f. of GLA and used 2story comps with approx. 50% finished basements for a GLA total of (+-) 5000s.f.

It should be noted that all of the original comps are on the same street but this is not necessary as the neighborhood offers several more similar comparables.
 

Larry Lyke

Senior Member
Joined
Feb 2, 2002
davidc ~

The answer to your question is "Yes." I'm addressing only para 4 in your post. You may be tending toward complicating your appraisal by not being stern enough in throwing about the "knowledge chaff" (read your last post too).

Sometimes the style of a subject property or its siting makes it necessary to be a tad creative with GLA. Otherwise, it'd could be impossible to use the immediate neighborhood properties as comps because they are more conventional or smaller, or whatever.

But GLA is the issue... When you know in your heart it's only "GLA-formulaic-rigidity" that's keeping you from easily arriving at an unforced and uncontorted Opinion of Value.

BUT do not trip over the UW lying in your path in the process... in your haste to reach for such tools as combining GLA and un-GLA numbers to get a more satisfactory GLA similar to the comps.

AND, be very clear how you arrived at your decision to do so and then explain in plain English declarative sentences to an English-reading UW how you made it work out so well!

A little myrth there, perhaps. I'm saying, do what you have to do and no more. Don't get creative like you've discovered this magic all by yourself and plan on patenting it.

Explain yourself clearly using no passive voice sentences! Not even one! Passive voice always suggests you are lying. AND, if you are, you've compounded a sin.

In which case, it's not only sinful, it's sinfulful!

An easy start could be using your predecessor's "GLA phrase" and doctor it.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
David,

If I'm following your explanation correctly, then it looks like the last appraiser ignored comps which were more similar to the subject, choosing larger comps in order to push the value estimate.

Don't sweat the GLA vs. non-GLA question, it's not as big an issue as finding comps that are most similar to the subject and treating all line adjustments to the comps similarly. I know this really flips out flatland appraisers, but in mountainous areas this is common and reflects the local market perception of value.

The disclosure that the last appraiser gave for calculating his GLA is okay, but he may have blown it when he chose 2-story comps, which appear from your explanation to be more valuable to typical buyers for their above ground GLA, and that's where the previous appraisal may have become misleading.
Stick with the comps that are MOST similar to the subject in design and overall apppeal and you will have the most accurate value estimate.

That being said, and since you haven't physically inspected the property yet, take a close look at any of the adjustments that the last appraiser used other than the GLA. Sometimes views, site size, etc. that have a significant impact on value in that market area will cause an appraiser to use comps that would otherwise seem dissimilar.

Keep an open mind and a closed mouth, inspect the property and comps, then decide if the other appraiser deliberately stretched or if there were special features that made the subject more comparable to the larger homes.

Good luck!
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
In this market, we tend to call those elevated Ranch or even split level as many tend to be slightly smaller than the upper floor, not a 1 story with basement. As for building costs, because of water problems, the building cost is at least as great as the upper level. They must have waterproof concrete walls, waterproof paint, gravel and french drain step ups in the heavy clay /rocky soils or moisture invaribly shows up. Full underground basements are rare, very rare, and invariably wet. Those suffer from functional obsolescence.

The bulk of these in my region are lakeside or in Bella Vista, a retirement village where the lots tend to be very steep. Per SF, the adjustments work out about the same. All are finished to the same grade.

This is not to say that the appraisal you have is not using this ploy to elevate the value in something lesser.
 

Tim The Enchanter

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Sometimes views, site size, etc. that have a significant impact on value in that market area will cause an appraiser to use comps that would otherwise seem dissimilar.

Amen to that Dee Dee. :)

Plain English declarative sentences versus passive voice sentences!

Ok, I'm paraphrasing your quote Larry. I guess I could try to look this up, but maybe you could give an example, like saying the same thing declarative and then passive? Just to clarify for us.
 

Larry Lyke

Senior Member
Joined
Feb 2, 2002
Lee ~

Passive voice is where the subject of the sentence is the receiver of the action (object):

ACTIVE VOICE: Lightning struck the tree.

PASSIVE VOICE: The tree was struck by lightning.

ACTIVE VOICE: Appraiser manipulated GLA to increase square footage.

OBLIQUE and PASSIVE VOICE: GLA was manipulated to ameliorate subject's style difference.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
PASSIVE: He was bent upon seeing her.

ACTIVE: The sight of her doubled him up.
 
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