School District Boundaries VS. Neighborhood Boundaries

[Spring]

I am not an appraiser, but rather recently sold a home. The home was appraised low by $9,500. The home we sold lied on the boundaries between, an urban school district and a suburban school district. The house is just within the boundaries of a large urban school district. My concern is that the appraiser used a very large 16 square mile boundary in order to include only homes located in the urban school district, even though there were many recent home sales in the proximate neighborhood which lies within the suburban school district. She even mentioned in an addendum that her school district criteria limited her pool of comparables. The appraiser reached far out of the neighborhood to find comparables in the same school district, crossing a lake and an interstate highway. My question for appraisers is--Does the school district criteria take precidence over physical location and other neighborhood characteristics? I didn't see anything in the Fannie Mae and Freddie Mac guidelines to indicate this is acceptable practice.

 

[Randolph Kinney]

I am not an appraiser, but rather recently sold a home. The home was appraised low by $9,500. The home we sold lied on the boundaries between, an urban school district and a suburban school district. The house is just within the boundaries of a large urban school district. My concern is that the appraiser used a very large 16 square mile boundary in order to include only homes located in the urban school district, even though there were many recent home sales in the proximate neighborhood which lies within the suburban school district. She even mentioned in an addendum that her school district criteria limited her pool of comparables. The appraiser reached far out of the neighborhood to find comparables in the same school district, crossing a lake and an interstate highway. My question for appraisers is--Does the school district criteria take precidence over physical location and other neighborhood characteristics? I didn't see anything in the Fannie Mae and Freddie Mac guidelines to indicate this is acceptable practice.

According to Fannie Mae, a property is comparable if the market considers it a competitive substitute. Once a property is determined to be comparable by the appraiser, then appropriate analysis and market adjustments are applied. Analysis and adjustments to comparable sales must be based on market data for the particular neighborhood and for competing locations.

If there is a market value difference between school districts, any comparable property chosen in the neighboring school district would reflect that and must be adjusted accordingly.

 

[Thomas Fiehler]

Around here (Cincinnati) school districts are the #1 search field. Would a buyer prefer one district over another? If so, then the appraiser did his/her job.

 

[Spring]

Please let me know the authority who determines market value of school districts? If this market value determination exists it would be great for the appraiser to add it to comments in the addendum to justify why school district boundaries were used over neighborhood boundaries in choosing comparables. For example would be acceptable to state that only homes located in a monarch migratory path were selected for comparables without any explanation of why. Thank for your consideration.

 

[JasonHaskell]

As someone who lives there, what do you think of the two schools in question? Is one clearly and substantially better than the other? If the answer is yes, it might be better to stay within the school district for comparables, otherwise location adjustments will be needed to reflect the difference between districts.

 

[Spring]

If school district is critically important for determining market value of a home why isn't listed on the Uniform Residential Appraisal Report with the option of + and - adjustments, ie -10 for a large urban district, + 10 for a suburban district.

 

[The Warrior Monk]

My question for appraisers is--Does the school district criteria take precidence over physical location and other neighborhood characteristics?

This is market specific. The main area where I work school districts are a non-issue. However, I've worked in other areas where school districts make a huge difference in value.

 

[Spring]

I personally feel that the large urban school district is better. I have strong ties to the school district and value the diversity that exists. I went to the schools there, as well as my children and grandchildren. However the prevailing view in our community is that the suburban schools are better. Wouldn't this determination be better left to the home buyer than the appraiser? School district information in Illinois is posted online and is easilty accessed by all. When the appraiser places an additional school district penalty for being in the "bad district" it effectively doubles the adjustment that is already placed by the marketplace. We had an offer on our home by a well-educated couple who knew what school district the home was in.

 

[The Warrior Monk]

If school district is critically important for determining market value of a home why isn't listed on the Uniform Residential Appraisal Report with the option of + and - adjustments, ie -10 for a large urban district, + 10 for a suburban district.

The URAR form is simply a standard form used for certain types of lending assignments; other appraisal assignments do not require them. Also, the URAR form does not dictate the appraiser's compliance with professional development and reporting standards; that is a requirement upon the appraiser.

When it comes to school districts, it is typically accounted for in the "location" adjustment. Many other factors are also considered in that category. For example, there is no category for properties abutting active municipal landfills, yet that is likely to have an adverse effect on value, and is accounted for in the location adjustment. Location factors such as this should be discussed in the narrative for clarity, which it appears the appraiser of your report did.

 

[The Warrior Monk]

I personally feel that the large urban school district is better.

What matters is what the market dictates. Personal opinions do not matter in value disputes with the lender. Do you have market evidence that clearly demonstrates that buyers prefer one school district over another?