Retrospective appraisal problems

[phoebega]

Hi, I'm trustee for my late mother's trust and recently ordered a retrospective appraisal of her residence for tax purposes, in anticipation of selling. I have some issues with both the appraiser and the appraisal and would greatly appreciate hearing the opinion of some other appraisers.

The house is in a secluded upscale subdivision, next to a forest preserve (Duval Co. FL). All lots are 1+ acre. There is no other housing in the area on 1+ acres with the exception of a few scattered houses on the opposite side of the preserve. Also, within the subdivision (42 houses) only 13 houses actually back up to the preserve, including my mother's. There are no close comparables, turnover in the neighborhood is very low. I knew this when I started talking to realtors in preparation for listing the house, and the appraiser also indicated this in his report. I met with a number of realtors and their recommendations regarding listing price varied by nearly $100,000.

The appraiser assured me he would have the report done in 10 working days. On a Friday after 15 working days had passed I still hadn't heard from him, so asked for an update. He replied he thought he could finish up by Monday. It actually took another 5 working days for him to finish, so 20 working days total. I then had a question about his methodology, which he ignored. I had to poke him with requests multiple times to get him to answer, and his answers didn't directly address my question. I've gone through 3 rounds of trying to get a straight answer from him. At this point after his delay and evasive answers I don't have a lot of faith in the accuracy of the appraisal. I haven't paid him yet which I'm sure is the only reason he's still continuing to respond (although in a delayed and evasive manner) to my questions.

My main issue is with his adjustment for the preserve view location, $5000. Based on my research regarding appraisal adjustments in Florida, and also discussion with the realtor who listed the house when my parents bought it and has continued to focus for 35 years on the limited geographic area around the preserve, it seems in this price range the preserve view adjustment should be $25,000. For a couple of different reasons I also strongly suspect the appraiser decided on value, then manipulated adjustments to back the comparables into it. I have a background in corporate financial analysis and planning and understand how financial projections can be manipulated. Maybe backing into a predetermined appraisal value is something that's commonly done, I don't know. But does not seem ethical to me.

Thank you in advance for comments.

 

[Meandering]

sorry you find yourself in this situation.
If the appraiser is lacking sufficient communications with you as the client,
you may want to offer them one last chance to sufficiently answer your questions, or state that they will not be paid.

I'm curious to know if the appraisal will be used for estate tax purposes, and if so, was the appraiser notified of this, prior to them accepting the work? The IRS does not follow the "market value" definition which is commonly used in lending appraisals, and thusly, there could be a value opinion difference, between the IRS's "Fair Market Value (FMV), and the lending requirement for use of Market Value as defined in 12 CFR 34.42, which is the "common" value definition that appraisers use, because lending work is the most prominent source of their business. Because the appraisal opinion is in response to the definition of the value sought, the value opinion, and possibly the adjustments to comparable sales, could differ, as each test/research/consideration, must take in to account the requirements of the specific value definition. Add to that, the common lending work, which has mountains of additional requirements that too many appraiser become far too accustomed to doing, well, it could lead to many questions from many people who are not familiar with the technicalities of appraising, especially if the appraiser is far too entrenched in lending work to remember they have to "do somethings differently" when working on assignments that are not for lending.

But since you are the client of this appraiser, they should answer and respond to your questions, if their report does not already address your questions. If not, interview your next appraiser more diligently in their experience with appraising for estate purposes, without use of lending requirements.

;

 

[glenn walker]

Views are often very Subjective and extracting one requires the Subject to be in an area where other homes have similar views. It does not sound like your properties area has a large enough pool of sales to extract a supportable view adjustment. In situations like this I like to include any positive view into my location adjustments. A property can have a great view but a crummy location or it can have a view and also be in a great location. On estates you want the highest value so you can use your stepped up basis and unfortunately that can often lead to a lot of wants and needs placed on the appraiser. Also the retrospective appraisal is not for a sale and your Realtors price opinions may be right or wrong but until you start receiving offers nobody really knows. I do quite a few retrospective appraisals for both accountants and attorneys and if the client was ever audited I would not want to try and defend a "view" adjustment if challenged by the IRS unless I had a spread sheet with multiple sales in the same neighborhood or similar market area that clearly showed what effect views had . Based on your description your view is just not a hill I would want to die on.

In Summary : CONSIDER ASKING THE APPRAISER to consider if your location and view as a package is $20,000 superior to the ones he/she uses in the report. I am also a broker and when people tell me they have a view my first question is of what ?

 

[CANative]

Pay the appraiser. You purchased an opinion, not a result.

20 days is not all that long for a complex assignment. Reators® sell property, they don't appraise property, few of them have a clue about appraisal, and most just want you to list your property with them (upward $25k adjustment vs. $5k adjustment, for example... it's what you wanted to hear.)

 

[Artemis Fowl]

He delivered the report without getting paid? I already have questions right there...
Agree with CAN

 

[Red Flint]

Pay the appraiser. You purchased an opinion, not a result.

Agree. Use the appraisal for tax purposes and pay, after getting questions answered satisfactorily. Hire another appraiser for a market value sale purpose - value as of site visit. Be prepared for buyer to also have another appraisal done, with possible repercussions on brokered deal.

A check on the appraisal is if an extraordinary assumption was used in the report, typical for historical work, stating that the property condition as of the historical date was similar or equal to that condition existing on the site visit date. There should also be a comment somewhere in the report that the valuation results would be affected if the assumption not true. Appraiser should also have checked that no building permits were issued during the time range between the effective (historical) appraisal date to the site visit date, and interview you for any recent work done, if any.

 

[CANative]

It also sounds like the OP use the report, as George H might say, in an "off label" manner. Intended use that the report was prepared was for retrospective value, not current value or, even worse, a value at some point in the future (marketing purposes.)

Never, EVER, do that.

 

[Restrain]

Ok, so you have a retrospective appraisal as of a certain point in time. You don’t mention how far back you are going in time which can be a significant factor, depending on the market. That value, again depending on time, may well NOT reflect current MV. As with others here, send the appraiser a letter outlining your concerns. (As an aside, if the appraiser used the Fannie/Freddie/FHA form instead of the GPAR form, that is a big red flag). Then for marketing, just get several estimates from agents. Choose the best, Stage the home, and move on.

 

[Flakey]

So, You disagree with the value, withhold payment and question the Appraisers ethics?

 

[TRESinc]

something tells me we may never heard from the OP again...

My main issue is with his adjustment for the preserve view location, $5000. Based on my research regarding appraisal adjustments in Florida, and also discussion with the realtor who listed the house when my parents bought it and has continued to focus for 35 years on the limited geographic area around the preserve, it seems in this price range the preserve view adjustment should be $25,000. For a couple of different reasons I also strongly suspect the appraiser decided on value, then manipulated adjustments to back the comparables into it. I have a background in corporate financial analysis and planning and understand how financial projections can be manipulated. Maybe backing into a predetermined appraisal value is something that's commonly done, I don't know. But does not seem ethical to me.

so two people who have no experience in performing real estate appraisals (one for certain, one most likely being an agent) have decided that what the appraiser did was wrong, but only after the report was completed and the client was not happy with the final number and is withholding payment after the product was received. got it.