Question for Brian

[Pat Butler]

Hey Brian- I did an ERC appraisal and the client provided me with a rebuttal from a real estate agent. They also provided me with the agent's BMA report and want me to comment on it. Does SR-3 apply when I start commenting on a BMA report?

The majority of the ERC BMA report has more to do with marketability and there's just the one line where the agent talks about the anticipated sales price.

 

[Brian Weaver]

Yup. Competency & Ethics relate to the reviewer; not the reviewed. USPAP does not distinguish between a knowlegeable practitioner's report being reviewed or a lay person's report.

Standard 3 relates specifically to the Reviewer.

 

[Mary Tiernan]

But, I have handled this type of situation without invoking a review.

i.e.,

Client has provided appraiser with additional sales in the area and has asked appraiser to comment if the sales provided affect the original opinion of market value.

I then go on with a brief summary of

Sale 1, blah blah

and end the addendum with the comparables as provided in original appraisal report are considered the most reliable as of the effective date of the appraisal and are truly representative of the market value as provided. No change to opinion of value as provided.

That way I am only reviewing my report and considering additional sales provided by them.

 

[Pat Butler]

Thanks Brian. The client isn't going to like the fee. The problem is that the BMA is riddled with so many errors that my review is going to take forever.

It's sort of a quasi-assignment like Mary mentioned. The client provided me with the BMA in response to a very incompetent agent saying they didn't like my value. So on one hand, I'm making comments on their comments to my appraisal. I just might limit my comments to defending my appraisal and not review their BMA.

The agent argued that the basement bathroom should be included in the room count. Their value was based off of some online cost-versus-contribution chart from Remodeling Magazine. They took the cost of homeowner's recent improvements and multiplied those costs by the "% returned" from the chart. Not even any sort of recognizable appraisal methodology.

 

[JRS at OBX]

Their value was based off of some online cost-versus-contribution chart from Remodeling Magazine. They took the cost of homeowner's recent improvements and multiplied those costs by the "% returned" from the chart. Not even any sort of recognizable appraisal methodology.

Sounds like the Flip This House shows. New toilet! Cost $125. Added value $6500 woohoo

 

[Pat Butler]

To make matters worse, the homeowners paid about $250 per square foot for an attached porch. So when the agent applied the artificially high recapture percentage to this way-too-high construction amount then the adjustment becomes way too high.

The agent claims the homeowner paid $40,000 for a 160 square foot 3-season porch. I added 200 square feet of legitimate living area to my house a few years ago for about $20,000 less than that and my house is not too far away.

 

[athome77]

I know this won't help with your situation, but your thread reminded me of my most challenging ERC assignment about 2 yrs ago. 4000+ sq ft 2 story/split in S. Holland. Property was located on 1 1/2 acres backing to I-94 expansion. The homesite is only accessible through an easement across park district land. Behind the main home is a two story, two unit coach house. Oh, and the ERC client requested I make a note of water damage in the basement and try to isolate its cause.

I came up with a realistic anticipated sales price, despite all of the factors noted above. Second ERC appraiser's findings were within 3% of mine (no collusion, we never spoke). We both emphasized the atypical nature of the property and need for a drastic reduction in price to accomodate client imposed marketing time.

The listing agent provided a scathing critique of my report, including suggestion that my incompetence be reported to the appropriate autorities. "Comparables" she provided did not reflect any of the challenges facing the subject property. The agent was confident the property could be sold, at or near full list within 90-120 days. I did not provide a "review" of the data she provided but did provide a verbal account to the client of the obvious flaws in the reasoning of the agent. As an established client they were happy with the reasoning of both appraisers and nothing more was said. We still receive orders from them, but fewer given the current environment.

Just for fun I looked up the property on the MLS.

Finally sold 02/2008 Sales Price 35% below original list
Combined Market Time 600+ days

Its nice to be right once in a while

 

[xmtpedprl]

AtHome,

Wow, the property you're talking about is near synonymous to a property I have done (twice now) in Westchester. Accessible via a small drive between two homes, HUGE lot for Westchester, the whole she-bang. It was like Wayne Manor!! And you *never* know it was there, a really neat pad.

Big fee for that one, both times, and it is still one of the finest reports I've ever done, virtually a narrative on a summary. But a labor of love, because the fee was right!

Dave...

 

[Mountain Man]

To make matters worse, the homeowners paid about $250 per square foot for an attached porch.

D-aaaaaaam. It cost me a buck and sixty five scrints per SF to have a porch framed. I can do a heluva porch including heat & air, out door kitchen, flat screen TV with surround sound, and a freebie hot tub tossed in for that price line.

 

[Michigan CG]

D-aaaaaaam. It cost me a buck and sixty five scrints per SF to have a porch framed. I can do a heluva porch including heat & air, out door kitchen, flat screen TV with surround sound, and a freebie hot tub tossed in for that price line.

Same thought here...It cost me $3.12/ SF to build my deck. I did it myself so double that for labor to $6.24. I have had Realtors tell me that it is $20/SF in added value for a deck.......go figure?