Should we make more bedrooms or a studio apartment?

[KD247]

Sorry, I'm not going to take the time to read your entire post. As soon as I saw that you had to thoroughly massage the data, including equalizing other important value-influencing factors (in appraising, eliminating variables that way begs the question regarding the relationship between the variables themselves) in order to produce your extremely "accurate" coefficient, I knew that you were on the wrong track. You're bypassing the big picture and hiding in the details.

If the market in your area was as predictable as you imply, there wouldn't be any disagreement with the appraisal. If the sales in your area are as disparate as you make them sound, then you absolutely shouldn't be ignoring comparables that are distant, older, vary in lot size, or vary in improvements. Ranking comparables is different than categorically rejecting them.

Even though the appraisal form requires component-based analysis and reporting, it sounds unlikely that buyers in your area look at properties that way. The secret to appraising in your area is likely to have a "feel" for which attributes (or the lack of) buyers consider to be deal breakers, which attributes buyers are willing to pay a premium for, which attributes they are willing to compromise on, and which attributes buyers will only accept if they come with a huge price discount.

What do you believe are the most important value determinants in your area? What's the relationship with your area and the closest areas that have more consistency in sales? If your house was currently listed for sale, what would be the next best alternative? What would be the most similar slightly inferior alternative? What's the marketing history and prognosis for those properties? How do they relate to both older and recent sales? How does the sales history of your house relate to other sales data? These are all questions that an appraiser needs to ask before they even get started with their analysis.

The trouble with doing your own appraisal is that it's hard for any homeowner to look at the situation from any perspective but their own. It doesn't mean that the appraiser is necessarily right and that you're wrong, but there is virtually a 100% certainty that your view is biased.

What would convince me that the appraiser had an unreasonable, fraudulent, or negligent opinion of value? It wouldn't be that another supportable opinion of value exists. That's commonplace. It wouldn't be that contradictory data exists. That's the very nature of the appraisal problem for complex properties. The only thing that would convince me would be if a trusted expert put at least as much time into the analysis as the appraiser and came to an opinion regarding the quality of the appraiser's work.

From my (our?) point of view, this discussion is much like an appraiser complaining about the adequacy of a philosophy course based on sundry detailed actions of the professor, analyzed in a way that only the appraiser saw fitting.

I appreciate that you're attempting to play the game by our rules but that's tough, particularly when there's so much debate about the rules between appraisers.

 

[Learner]

I'll keep it short for you.

My custom-built, stick-built, site built, place two miles down a dead end road on a five acre lot among five acre lots was appraised at the same price per square foot as the sale price per square foot of an older single wide trailer (with the full-width window on one end) on .8 acres behind a defunct liquor store on a major highway. The trailer's zoning is residential and it is about four miles from my home.

The trailer was not used as a comparable. I came across it trying to find a home that sold for that for as little as the appraised $/sq ft as my home.

Now yet another appraiser defends this appraisal. Is there not one appraiser that thinks that the appraisal I received was bad? Not one?

Please do the courtesy of reading my post in its entirety before refuting it,

 

[Learner]

I did the analysis in my old neighborhood -- called Old Town -- taking every sale or listing within the last year (discounted by the rate appraisers used) and got my straight line.

I can do the same in my village and get my straight with one property off it -- the single foreclosure.

The relationships do exist.

Oh, yes it does not take 27 cases.

 

[KD247]

... My custom-built, stick-built, site built, place two miles down a dead end road on a five acre lot among five acre lots was appraised at the same price per square foot ...

Hi Learner. I didn't read your entire post last time because of the methodology, not because I'm not interested in the conversation or because I have an opinion on the validity of your claim. I just can't agree with your initial premise, that subconscious human behavior has produced a consistent price per square foot trend in your complex neighborhood. (Now if you told me that buyers in your area all agree that property costs a hundred dollars a square foot and they incorporate that into their buying decisions, well that is a completely different chain of events.)

Ignoring all but one variable is not the same as testing for a single variable. Although appraisers may include regression analysis in a report as support for their opinion, an appraisal cannot stand solely on number crunching anymore than fashion industry forecasters can. We're talking about a "prediction" of human behavior, not about a measurement. It's pretty hard to tell if pink will be in next season by looking at graphs.

The appraisal you're criticizing might be the worst ever, or it might be a perfectly reasonable estimate of value. My opinion regarding the appraisal can't be formed in the hypothetical and everyone here is leery of conclusions reached by small bits of logic taken in isolation. But, it would be an interesting discussion to listen to your story (all I know is that you have a bunch of appraisals that you question) and see if it can be boiled down to an appraisal problem.

Appraising real estate is not a matter of equations, so I can't support you by saying the appraiser used the wrong equation. It's also not a simple situation of data collection technique or statistical analysis. Different appraisal problems require different methodology and there are surprisingly few rules that are appropriate universally. As I said before, unfortunately, the reporting form we use implies that the process of appraising any property involves consistent techniques and the same type of analysis.

So, if you want to take a big step backwards and explain exactly what the appraisal problem is, and what we're really trying to accomplish, I'm all ears.

 

[Learner]

Many thanks, KD47, but -- frankly, this thread is way off topic. It started with studio apartments and we are now into quantitative versus non-quantitative methodology. This may be my fault and I regret that. I personally hope that a moderator closes thus thread.

I myself have no interest in continuing this discussion and will no longer read this thread.

Many thanks to KD247 and all who respond. I hope to see your answers to a future question of mine.

 

[KD247]

Many thanks, KD47, but -- frankly, this thread is way off topic. It started with studio apartments and we are now into quantitative versus non-quantitative methodology. This may be my fault and I regret that. ...

So you hijack the thread and then parachute out when you discover that you don't like the change of course?

How about starting a new thread with an honest-to-goodness appraisal problem instead of treating us like expert witnesses in a trial? I looked back through a few of your numerous threads and there are questions regarding lots splits, water rights, measuring techniques, use conversions, etc. It's hard not to feel like we're being led on a wild goose chase while you pick up small pieces of ammunition to use against every appraisal you've received.

Are you just playing us, or are you genuinely interested in having a heartfelt conversation about the appraising of real estate? If the latter, you'll find us to be a generous and helpful bunch. If the former, not so much.