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Return on investments

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RAUL RIVERA

Freshman Member
Joined
Nov 21, 2018
Professional Status
Licensed Appraiser
State
New Jersey
Hi guys, I received a revision request and I am having trouble understanding what they want from me exactly

"Regarding the improvements since purchase – please expound on the investment since purchase ($ expended for the remodeling/updates) and the return (or lack thereof) for this investment in this particular market segment."

As per the owner electrical/removing knob & tube wiring, $9,000, Driveway $31,000, Retaining Wall $18,000, and Interior painting $9,000. Total $67,000.
fyi The home was purchased in Sept, 2018 for $975,000, $75,000 over list price.
 

Michigan CG

Moderator
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Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
Your current appraisal would reflect some of those improvements although it is not possible for us to know some of those things about the comps.

Did you appraise the home for the purchase in 2018?
 

RAUL RIVERA

Freshman Member
Joined
Nov 21, 2018
Professional Status
Licensed Appraiser
State
New Jersey
Your current appraisal would reflect some of those improvements although it is not possible for us to know some of those things about the comps.

Did you appraise the home for the purchase in 2018?
No i appraised the home recently for $1,000,000.
 

RAUL RIVERA

Freshman Member
Joined
Nov 21, 2018
Professional Status
Licensed Appraiser
State
New Jersey
my comps in the same condition within 200 sf give or take were 972,000, 1,000,600, 1,077,000 and 1,012,000 I know my value is good. The appraisal reflects the improvements and the increase in that particular market but i didn't do the original appraisal, and i can't figure out if thats what the revision question is implying ?
 

Michigan CG

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Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
No i appraised the home recently for $1,000,000.

I would explain that I did not previously appraise the home for the purchase and have no idea how the original appraiser addressed the deficiencies in the previous appraisal. In order for me to understand the value difference from then and now I would have to do an appraisal of the property at the time of the previous sale and that would be an additional fee.

They want a higher value. People expect retaining walls to be functional, people expect electrical to be up to date, etc. Paint is a personal choice and $9,000 is quite a hefty cost for paint.

I am going to guess that the purchase appraisal hit the contract price. They should have hired that appraiser to do the refi as he could answer his reasoning for the original appraisal opinion and the difference now.

This is simply pressure to get a higher number.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Hi guys, I received a revision request and I am having trouble understanding what they want from me exactly

"Regarding the improvements since purchase – please expound on the investment since purchase ($ expended for the remodeling/updates) and the return (or lack thereof) for this investment in this particular market segment."

As per the owner electrical/removing knob & tube wiring, $9,000, Driveway $31,000, Retaining Wall $18,000, and Interior painting $9,000. Total $67,000.
fyi The home was purchased in Sept, 2018 for $975,000, $75,000 over list price.
so an idiot paid over list price - and maybe or maybe not had an inflated appraisal. But that was then, ...though you can mention the paid above list price later if need be. After purchase, he paid for some rather mundane improvements . There is no obligation about a "return of investments", the owner just wants a higher value / a tantrum why spending 67k did not add 67k, or more ..
Here's a possible response

" Owner added the above 67k in line item improvements. they have been included as part of the upgrades and condition, which resulted in ranking the subject at the higher range of value among the comps. Itemized cost is not a direct return that can be measured and separated out from the whole, their contributory value was considered in the appraisal "

THE END,
 

Tim The Enchanter

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
" Owner added the above 67k in line item improvements. they have been included as part of the upgrades and condition, which resulted in ranking the subject at the higher range of value among the comps. Itemized cost is not a direct return that can be measured and separated out from the whole, their contributory value was considered in the appraisal "

THE END,

I would copy and paste this and maybe lightly edit to fit. Too bad you can't add video. :leeann2:

 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
The requirement for a retaining wall is an indication of a lower site value versus a site that does not require a retaining wall. There had to be an existing functional driveway prior to the new driveway, so at best its current driveway costs less the contributory value or cost of the prior driveway. Knob and tube is obsolete, but it did function at the time of the prior appraisal so like the drive had contributory value. Morons watching HGTV and other networks "reality rehab shows" have to be talked to or explained to like children or significantly cognitively impaired adults. You can't cure stupid.

You may also want to mention what the list to sales ratio in the market at the time of the prior sale was given the sale above list price.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
When was that last Purchase? I assume it was within thirty six months. So in your Subject Sale History Summation is where you probably should have said something. People argue that there is a relationship between a prior sales price and the current MV. OK, I can understand that. Apparently the owner thinks his improvements should have returned more than the current market Value. We all know that average Joe Homeowner ALWAYS thinks cost equals market value.

If the prior sale was reported in MLS, did you call the Agents involved to first try and determine why the current owner paid more than list Price back then? Me personally would like to see that Prior Sales Contract coupled with the Prior MLS Listing. There may be something in there that would explain a lot. I am not suggesting Hanky-Panky, but its beginning to smell bad.

Take a hard look at his prior settlement Statement. I think it was Jgrant above said something about SP/LP Ratio back then. I want to know why he paid more than the list price. Is it possible he is double Dipping here? Also, I don't know how your state records sale prices on the deed, but you might want to really look at that also. In my state the deed stamps $2.00 per thousand should match up with the reported MLS sales price within $500 bucks.

If the owner refuses your request for the prior settlement statement, then see if the Realtor(s) will help you out behind the scene.

FTR: I am not challenging you on your Opined MV. You could be right on the money.
 
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