Question about condo vs. attached SFR

[Webbed Feet]

So, here is what has happened since I first posted...the appraisal was reviewed and it was SIGNIFICANTLY REDUCED in value. (Actually, "the Appraisal" is worth just as much as it was when the appraiser signed it. The opinions of value between the original appraisal and the appraisal contained within the review report are different. Yes, you now have two appraisals, not one.) Unbelievable. The reviewer took out the two highest comps because they were located too far away and that left only 2 condo comps. (By the way, the property is in Long Beach/Lakewood, CA.) The seller had offered some additional comps but the bank (?) did not use them. Here's the lesson--in my market there is no difference between a condo and an attached SFR regardless of what the ownership says on title, FHA-approved or not, etc.

I had another deal go south today from a much lower second appraisal. First appraisal easily came in at the purchase price but the second was significantly lower. The appraisers used the same properties and came up with vastly different opinions of value.

I never realized how subjective the appraisal business is until now--one appraiser can value a pool at $15k and another one values the same pool at $25k; forced air heating is valued at $5k for one and $10k for the other, condition of the same properties were valued $40k different!!

I know it is what it is and we have to deal with it.

Another post documenting the wonderful experience the public is having with the current AMC world of paying appraisers $200 for $800 to $1,500 worth of work. When are you real estate brokers going to wake up and start filing state appraisal board complaints with the assistance of appraisers willing to guide you in the matters? The reality is yes, it is what it is, but the facts are almost none of you are "dealing" with it.

 

[Webbed Feet]

You need to work on your objectivity and stop taking things personally. Providing comparable sales is part of the agent's job and you can save yourself a lot of hassle by taking a few moment to discus them with the agent and how they compare with what you already found in your research. Sure some agents think that rundown bungalow in Watts is comparable to that mansion in Beverly Hills, but even they deserve courteous treatment and should not influence your expectations in regards to the contract price and your opinion of value.

I altered to red font the above because appraisers had better keep aware that the moment they do the above they just entered into both Standards One and Two and have begun to report confidential conclusions and opinions to an entity NOT their client. And, they've proceeded to do so before so much as providing a report to their own client to boot. Showing a Realtor your comp picks is showing them your value range opinion. Just exactly like doing "Comp Searches" for mortgage brokers was determined to be by most state appraisal boards.

 

[Webbed Feet]

<.....snip....>

I never realized how subjective the appraisal business is until now--one appraiser can value a pool at $15k and another one values the same pool at $25k; forced air heating is valued at $5k for one and $10k for the other, condition of the same properties were valued $40k different!!

I know it is what it is and we have to deal with it.

Then inform multiple appraisers and review appraisers alike, that you demand that they actually support those adjustments in their addendum. And, NOT just with stupid meaningless boiler plate like "...............extracted from the market," that leaves it completely unknown how the appraisers arrived at those adjustments. Demand to see that so-called "market extraction" with specifics how it was done and how the results were calculated and applied. IF any of them refuse or do not comply, then file state board complaints against all of them.

When thousands of Realtors all start doing the above two things will happen; Appraisal Management Companies (AMCs) will end up running out of cheap and fast appraisers to hire; quality appraisers that can put their money where their mouth (reports) is will be back in demand again and paid what they are really worth.

The problem itself is a direct result of the entire Real Estate community, and that means literally ALL commissioned folks involved (you too), all demanding instant results and all allowing each other to intentionally gravitate to service providers that do things that make your deals work. This Tsunami of appraisal crap was started during the boom years. Most of you allowed it, most of you wanted it, most of you sat back and enjoyed it. Well, now all of you are reaping what most of you sowed. A community of vastly dummed down, and mostly nothing but cheap and fast, real estate appraisers and hence real estate appraisal reports.

 

[Metamorphic]

Awesome I am in Finance for manager and we just covered this.. I can see what your saying and it works. Not only does it work it makes me money! LOVE IT!!!!

It works. But you have to be EXTREMELY cautious about covariance. Just tossing up PUDs vs Condos as the poster suggested could be extremely misleading if there are other differences between the PUDs and Condos besides the title difference. For instance if the PUDs included in the data set are in a better neighborhood or nearer the ocean that could create the differential. If the Condos are generally smaller than the PUDs that could wipe out the difference since smaller properties typically sell for higher $/SF prices.

 

[eld2310]

My guess would be that the appraiser's hands are at least somewhat tied by the "guidelines" (aka iron-clad requirements) that the client, most likely an AMC, has. Some that may be at play here are that you can't use all inferior or all superior comparables, no across-the-board adjustments, no comps that are more than a certain number of years older or newer than the subject (usually 10)...it's just easier to conform to the guidelines and avoid the long explanations and inevitable defending that happens when the appraisal doesn't fit neatly into some beancounter's checklist.

Also, once the appraisal is out there it's very hard for the appraiser to admit that it may not have been done correctly. The appraiser is much more likely to start making up stupid defenses like "you can't change a condo" rather than admit that he was just too lazy to look harder and explain better. Maybe he was only paid $150 and that's how much work was put into it.

 

[Couch Potato]

I altered to red font the above because appraisers had better keep aware that the moment they do the above they just entered into both Standards One and Two and have begun to report confidential conclusions and opinions to an entity NOT their client. And, they've proceeded to do so before so much as providing a report to their own client to boot. Showing a Realtor your comp picks is showing them your value range opinion. Just exactly like doing "Comp Searches" for mortgage brokers was determined to be by most state appraisal boards.

That is so full of sh**.

 

[MKBURNETT]

In San Diego we do not use condo to appraise pud. Land owned vs undivided interest are legally not the same. I think you should fine other similar PUD sales and try again to rebut.