Property Condition

[Sherry Harbour]

I recently received an appraisal back from a lender and he wants me to defend the appraisal. The uw states that she belives the property should be considered fair or even poor condition and if believe it to be average condition. I did mention some missing roof shingles, a broken window, and worn carpet. The house is 12 years old. I do not think this makes the house a fixer upper and in poor condition. The uw does not like the fact that the house do not look the same. My subject property is a ranch of 4+ acres, has a 1300 square foot guest house and an attached quest quarters with kitchen (except no stove), bath and separate bedroom. I put in a property that had these same criteria, but is 6 miles away. The uw states that the properties in todays market should be closer and and more recent in sales. How is that when there are less sales to choose from? Is my mentor just not teaching me well? How can I defend this appraisal?

Sherry

 

[Ariba]

I recently received an appraisal back from a lender and he wants me to defend the appraisal. The uw states that she belives the property should be considered fair or even poor condition and if believe it to be average condition. I did mention some missing roof shingles, a broken window, and worn carpet. The house is 12 years old. I do not think this makes the house a fixer upper and in poor condition. The uw does not like the fact that the house do not look the same. My subject property is a ranch of 4+ acres, has a 1300 square foot guest house and an attached quest quarters with kitchen (except no stove), bath and separate bedroom. I put in a property that had these same criteria, but is 6 miles away. The uw states that the properties in todays market should be closer and and more recent in sales. How is that when there are less sales to choose from? Is my mentor just not teaching me well? How can I defend this appraisal?

Sherry

From your description of the property it looks like a complex assignment. If you and your mentor feel good about the appraisal then why do you care what the UW says. The UW did not see the property and does not have an appraiser license. Just report what you saw.

Having said that, where is your supervisor? I presume that he/she signed the report as supervisory appraiser. Did he sign the report as “did inspect interior and exterior of the subject property”? Your supervisor should be the one talking to the UW.

 

[hastalavista]

How can I defend this appraisal?

Sherry

Sherry-

Welcome to the forum.

First, I wouldn't look at it as defending your appraisal. My question is, was your appraisal persuasive to begin with? I can't answer that- you probably can.

Second, it sounds like you have an unusual property from the get-go. That takes additional time and energy to communicate your analysis in the report. Forget about boilerplate or template statements; how much meaningful and subject specific information was included in the report to explain its uniqueness and your steps to analyze and then value that uniqueness?

Broken windows, soiled carpet, missing shingles. That may not result in a structural integrity problem but that is not the "average" condition in my markets.
Especially from what you describe- a main house with guest house and with significant deferred maintenance all only 12-years old.

As far as going several miles out to match the guest house amenity, that may or may not be appropriate. I don't know because I don't know your market. You need to make an argument that the "comp" 6-miles away is in a similar (or same) location, shares a similar (or same) buyer pool, and would be considered as a likely substitute for the subject in the market.
A discussion such as this one alone may take me a half-page to walk my reader through the steps I took to analyze the issue so that at the end, the reader is convinced that my process was appropriate and produced reliable and credible results.

That's the best I can do; give you some general feedback. Perhaps one of the forumites that share your market can give you subject-specific feedback.

But I think you have enough to judge yourself if your report is credible on its own, or if additional comment and analysis should have been included given the uniqueness of the subject and the specifics of the property.

Good luck.

 

[Mike Boyd]

I would disagree that needing roof repairs and having broken windows would qualify it as being in average condition.....unless you make the report "subject to" those repairs. Roofs and broken windows could be considered health and safety issues as well as structural.

Rather than calling their request a "to defend your appraisal" they should be asking for a rebuttle of a review (whether written or stated over the phone). In the rebuttle (if you can do this) you state that the comps used are the best available and then explain what steps you went through to find more similar recent sales. You should explain WHY they are the best available. Such as a rural area, few sales, individually designed and built, not an area of tract homes. Explain your adjustments and how you developed them. Answer EACH of their questions in chronological order and elaborate as much as possible to fill up at least a full page of narrative.

 

[Elliott]

Sherry,
Shows us some pictures, please. Then
we'll spout our learned 'drive by' opinions.

 

[Ariba]

Broken windows, soiled carpet, missing shingles. That may not result in a structural integrity problem but that is not the "average" condition in my markets. :shrug

I would disagree that needing roof repairs and having broken windows would qualify it as being in average condition.....unless you make the report "subject to" those repairs. Roofs and broken windows could be considered health and safety issues as well as structural.

Repair broken window +/-$100.00
Clean soiled carpet +/- $150.00
Replace missing roof shingles +/-$300.00
Total estimated cost +/-$550.00

So in your market area $550.00 would change a property from average to fair/poor condition? So in other words all your properties you marked in the grid average cannot not have any adjustments greater than $500.00 or you would either have to mark it in fair/poor or good excellent condition. A rather small window I say. :Eyecrazy:

 

[Sherry Harbour]

I would love to show you some photos. But how do I attach them to the post?

 

[Richard Carlsen]

A couple of questions Sherry:

#1 What do you consider the effective age of the subject to be?

#2 Would your market see this property, even though it has some deferred maintenance, as being of such a condition to be within the "average" range for 12 year old properties that are offered to the market?

I use the effective age as the basis for my condition comparison in the grid. And in my market, a 12 year old house could have an effective age of from 5 to 10 years and be considered "average" condition for the market.

Not knowing how you view the property and approach the grid, it is nearly impossible for us to tell you how to defend your position.

The bottom line is, you should know your position before you enter something on the grid. You should know why and be able to defend your use of the word "average". This is really something you should discuss with your mentor since, I'm assuming, this is for lending and he is responsible for the report.

 

[Ariba]

I would love to show you some photos. But how do I attach them to the post?

Go to the bottom of the page to "Posting Rules" under "You may post attachments" Good Luck!

 

[Kevin Keck]

I would bet that this is an underwriter that does not want to make the loan and is trying to use the appraisal as a basis for denial. Condition ratings are very subjective and should relate to property conditions in your market area. If you and your mentor believe the property is in average condition you should stick to this assessment.