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Stone VS Brick, Ranch VS Two Story, In Floor Heat VS Forced Air, Heated Square Feet

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EMSIJO

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May 9, 2010
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Wisconsin
I am building a new home in Mequon, split ranch, 10/12 pitch, 3,200 + square feet, 4 bedrooms (one is listed as a den but I will be using it as a guest room because it has a closet), 2 private suits, 3 full baths, GR, DR, LR, Kitchen, Pantry (not listed on plan yet), radiant in floor heating including porch, cherry and onyx tile flooring throughout, Silestone and onyx countertops.

1) Based on everything that I read, a ranch is more expensive to build than a two story. No additional credit was given for that factor when comparing my home to two story homes.

2) My home will be 95% lannon stone veneer and 5% stucco. My home was not compared to stone homes only partially brick. No additional credit was given. (Stone is almost twice as expensive to apply as brick.)

3) I was under the impression that square footage includes all heated square feet. The porch, which will have a fire place and radiant in floor heat, was not considered in the square feet calculation.

4) My home will have radiant in floor heat, all comps had forced air, nothing additional for that either.

5) In most cases the house was compared to 3 bedroom instead of 4 bedroom homes because, apparently, no credit was given to the den with the closet which I plan to use as a bedroom.

6) All but one of the 6 or 7 comps were several years old. No credit was given for new construction.

I assume that the appraiser had full access to the building plans that I submitted. Only the footprint was included in the appraisal. I might also add that I was not disappointed with the appraisal because it more than covered my loan.

I feel the appraiser was at a disadvantage because there really are not any "real" comps on the market to compare it to. That is why I am building. There are a ton of large (3,000 + sq ft) 1.5 and 2 story homes in Mequon for sale right now but I could not find one 4 bedroom, 3 bath home with all of the square footage on the first floor.

Why did I not get additional credit for those 6 factors?
 

Calvin the Airedale

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Aug 17, 2004
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Certified General Appraiser
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Ohio
I am building a new home in Mequon, split ranch, 10/12 pitch, 3,200 + square feet, 4 bedrooms (one is listed as a den but I will be using it as a guest room because it has a closet), 2 private suits, 3 full baths, GR, DR, LR, Kitchen, Pantry (not listed on plan yet), radiant in floor heating including porch, cherry and onyx tile flooring throughout, Silestone and onyx countertops.

1) Based on everything that I read, a ranch is more expensive to build than a two story. No additional credit was given for that factor when comparing my home to two story homes.

I'm a bit confused. Is it a ranch or a split level? While ranches my be more expensive to build, they are not necessarily more valuable than similar size multi-story homes. The sale comparison approach should have provided some discussion of the comp selection criteria and process, including why dissimilar styles were used in the comparison and how such differences, if any, were reconciled.

2) My home will be 95% lannon stone veneer and 5% stucco. My home was not compared to stone homes only partially brick. No additional credit was given. (Stone is almost twice as expensive to apply as brick.)

If people were paying more for limestone veneer homes of any style, you'd see a lot more of them. Yes, they are more expense than brick. That's why their applications are found in mostly institutional and commercial uses. I can't speak for your appraiser and do not know your market but it is likely that such siding is an overimprovement, an amenity that does not add value in proportion to its cost.

3) I was under the impression that square footage includes all heated square feet. The porch, which will have a fire place and radiant in floor heat, was not considered in the square feet calculation.

Porches, when defined as such on the BPs, are not usually included in the living area. They are external amenites of generally seasonal use. The extent of glass and other finish, sets them apart from most living area and makes year round use, even when heated, difficult, expecially in a climate such as Wisconsin.

4) My home will have radiant in floor heat, all comps had forced air, nothing additional for that either.

Is radiant floor heat as common as FHA in your market? I suspect not. Will the home have CAC? If FHA is common, and the comps have CAC, they may have broader acceptance and appeal and thus any use of a different method of heating will limit buyer appeal, and perhaps value. The report should contain some discussion, however, of the differences, especially of you don't have CAC and the comps do.

5) In most cases the house was compared to 3 bedroom instead of 4 bedroom homes because, apparently, no credit was given to the den with the closet which I plan to use as a bedroom.

Again, not seeing the report, it is difficult to get inside the author's head. Often, I will note that no adjustments are made for differences in total room count or bedroom counts, if my square foot adjustment factor is sufficient to account for all such differences.

6) All but one of the 6 or 7 comps were several years old. No credit was given for new construction.

Perhaps no credit is due for new construction. Again, without a good knowledge of your market, this is a difficult item on which to comment. The appraiser should have discussed it, however.

I assume that the appraiser had full access to the building plans that I submitted. Only the footprint was included in the appraisal. I might also add that I was not disappointed with the appraisal because it more than covered my loan.

I feel the appraiser was at a disadvantage because there really are not any "real" comps on the market to compare it to. That is why I am building. There are a ton of large (3,000 + sq ft) 1.5 and 2 story homes in Mequon for sale right now but I could not find one 4 bedroom, 3 bath home with all of the square footage on the first floor.

Why did I not get additional credit for those 6 factors?
It sounds like you're building a unique house suited to your individual tastes and quality preferences. If so, it will suffer somewhat in comparison to similar sized good quality housing of more broader appeal.

Good luck.
 

BRCJR

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Licensed Appraiser
State
Virginia
Post # 2 is correct and credible
 

EMSIJO

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Joined
May 9, 2010
Professional Status
General Public
State
Wisconsin
Response to your questions.

Thanks so much for your quick response. Let me clarify a few things.

The "split ranch" I am building is all on one floor, the Master on one end of the house and the other suite and bedrooms on the other side. It is NOT a split level ranch. The appraiser was at a disadvantge because he did not have solid comps and did state that in the appraisal. My concern was the credit or non credit that was given.

Lannon stone is very popular in Wisconsin. The home that I sold (in three weeks I might add) back in June of last year was a full lannon stone home and I got my asking price without a realtor. THAT stone is important, especially in a down market. The house was not under priced because I was in no hurry to sell. I loved that house but it was too small for my 85 year old father to live with me.

I am turning the screen porch into a four season room now that I know there is not much credit for the porch.

Before making a decision to build this house I did a lot of homework. A single story, split ranch, floor plan is now one of the most popular to build today because the baby boomers are aging and many are helping to care for aged parents who are living longer.

I called 3 appraisers and asked them how much credit I would get for full stone in the front of the house and a 4 foot belt around the house and they said, "nothing" because it was considered "decorative" stone. One would have given me a $20,000 credit if I put stone all the way around the house and the others would not give me a price without seeing the property. I also asked them about radiant in floor heating and I remember one of them distinctly saying, "Now THAT is big!" in a positive tone. I also read articles on the "must haves" for high end homes if building in today' market and radiant in floor heating was high on that list.

I can't thank you enough for taking the time to respond to me. This appraisal and your comments have taught me a lot about the valuation of real estate.
 

Metamorphic

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Mar 15, 2008
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Certified Residential Appraiser
State
California
Things like a exterior stone you're talking about are typically lumped together with all the other features of the home into an overall "quality" rating. They don't get adjusted individually. So lets say that because of your exterior stone and heating, the appraiser feels your home is "good" quality. In looking at comparables he may find one that lacks the stone and in floor heating, but that comp has full thickness hard wood floors, granite counters, and lots of built in cabinetry which he feels makes that comp an above-average or "good" quality home. Sure, they just have a plain stucco exterior and a regular FAU, but you've got pergo floors, tile counters, and no built'ins. Both homes are good quality, they're just good quality for different reasons.

This approach is necessary because an appraiser is obliged to make adjustments based on how the market reacts to these things, not based on their installation cost, or some arbitrary concept of value. As a practical matter its fairly difficult to find market based adjustments when you're looking at the big picture of overall quality, to parse that analysis down to individual features like you are talking about is nearly impossible. Once in a very great while you'll find a pair of sales that will allow you to document the value difference for something like you're talking about but that's just dumb luck.

You should probably take a dispasionate look at the comparables and see if they have higher quality materials in their construction. Stone exterior is a big deal for *you* but a lot of people could care less. I find that people that have spent a lot of time working with their own two hands on homes are very fixated on low maintenance exteriors and long lived components. But there's a whole world of people out there that pay people to do the work and are far more focused on interior design and style issues. As an appraiser we have to look at the big picture.
 

Tim Schneider

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Feb 8, 2007
Professional Status
Certified Residential Appraiser
State
Wisconsin
Send your list of questions to your lender and demand the appraiser respond to them. Any professional appraiser should have no problems reponding to or explaining their report.
 

AnonApprsr

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Jan 21, 2008
Professional Status
Certified Residential Appraiser
State
Massachusetts
Send your list of questions to your lender and demand the appraiser respond to them. Any professional appraiser should have no problems reponding to or explaining their report.
My bold... maybe you could ask. I disagree that any professional appraiser would have no problems to being demanded to respond to the home owner. I'm sure a lot would comply, but have no problems? Maybe not...
 

Tim Schneider

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Joined
Feb 8, 2007
Professional Status
Certified Residential Appraiser
State
Wisconsin
My bold... maybe you could ask. I disagree that any professional appraiser would have no problems to being demanded to respond to the home owner. I'm sure a lot would comply, but have no problems? Maybe not...
Take off your appraiser hat ad think like a consumer, I'd be upset too.
 

EMSIJO

Thread Starter
Freshman Member
Joined
May 9, 2010
Professional Status
General Public
State
Wisconsin
I think all of you who are appraisers will get a kick out of this one. The bank is STILL working on the details of this construction loan after 4 weeks! I was informed today that because the silt fence was on the property that they had to send the appraiser back to the lot to make sure no construction had actually started. He came back and told the bank that we had already dug a hole! THERE IS NO HOLE THERE! He apparently never got out of the car to check it out! I told that bank that I would bet the appraiser $10,000 that the hole was never dug on the lot. This is insanity. Couldn't an appriaser lose their job (or license) if they were too lazy to actually check the property and then falsely submit a report?
 

DMZwerg

Senior Member
Joined
Mar 25, 2009
Professional Status
Certified Residential Appraiser
State
Wisconsin
2) My home will be 95% lannon stone veneer and 5% stucco. My home was not compared to stone homes only partially brick. No additional credit was given. (Stone is almost twice as expensive to apply as brick.)

If people were paying more for limestone veneer homes of any style, you'd see a lot more of them. Yes, they are more expense than brick. That's why their applications are found in mostly institutional and commercial uses. I can't speak for your appraiser and do not know your market but it is likely that such siding is an overimprovement, an amenity that does not add value in proportion to its cost.

4) My home will have radiant in floor heat, all comps had forced air, nothing additional for that either.

Is radiant floor heat as common as FHA in your market? I suspect not.
Lannon stone does actually normally command higher values in Wisconsin, especially around Milwaukee, but it really depends on the neighborhood and quality of construction. In average to good homes it is very important, slightly less so in Very Good, and practically inferior to cedar shingle and some other materials in Excellent quality, at least in my experience.

Radiant floor heat is quite uncommon (practically rare) but is starting to be seen in upper middle class homes in WI, especially 4-season rooms added on to ranches of the style the poster described. I base this in part on having friends & relatives living in such homes that have been talking about additions.


The appraiser was at a disadvantge because he did not have solid comps and did state that in the appraisal. My concern was the credit or non credit that was given.

Lannon stone is very popular in Wisconsin. The home that I sold (in three weeks I might add) back in June of last year was a full lannon stone home and I got my asking price without a realtor.
May have been his search parameters and how exactly he weighted the immediate neighborhood. Around this area even certain construction companies have better reps than others and can influence value of new(er) homes.

If you have too many concerns and comments to the lender have no affect you may want to consider a second opinion (appraisal) but consider whether or not that would cost more than the potential difference or not and whether or not your loan would go through without it. The market may be changing over the course of the last month or so as well (either up, down, etc).

I do agree that porches are generally not part of SF ... a 4-season room or a room open to the rest of the house probably would though. Just remember that the appraiser probably also only included areas located above grade.


Things like a exterior stone you're talking about are typically lumped together with all the other features of the home into an overall "quality" rating. They don't get adjusted individually. So lets say that because of your exterior stone and heating, the appraiser feels your home is "good" quality.
Depends on the appraiser. Some of us do adjust for exterior as we have detected definable market preferences. An example is some urban areas in SE WI show a strong preference for brick (+10% to +20%) compared to frame, vinyl or aluminum and this is sometimes most pronounced in the worst urban areas (bullets bounce). Stone, and especially lannon stone, often shows an additional market preference, but in Good to Very Good construction the difference may not be a noticeable/distinct.

This approach is necessary because an appraiser is obliged to make adjustments based on how the market reacts to these things, not based on their installation cost, or some arbitrary concept of value. As a practical matter its fairly difficult to find market based adjustments when you're looking at the big picture of overall quality, to parse that analysis down to individual features like you are talking about is nearly impossible. Once in a very great while you'll find a pair of sales that will allow you to document the value difference for something like you're talking about but that's just dumb luck.
Meta makes an important point here so I will shift the focus only. Another way of looking at it is that sometimes other additional features (full sized windows, walk-out basements, master suite, etc) can obscure many of the smaller adjustments, especially when fewer houses are selling and there tend to be more foreclosure sales. Due to this an appraiser may well equate brick, partial brick, hardiplank, stone and partial stone because the only discernable market reactions he can support are between those and vinyl.

Now then, does your plan include a walk-out basement or a partially exposed basement with full-sized windows and does the plan call for basement finish or not?


As for point #5 it generally isn't as much a factor in your end of the market as you would think. Comps may well have had dens, etc, but bathroom count is often more important than bedroom count in that style of home and open concept, cathedral ceilings, and so forth are generally also more important. As long as it has more than 2 BR count rarely has any influence in most SE WI markets. Number of fireplaces is also usually more important than # of BRs.

There are probably a couple 4BR 3Ba ranch/1-story comparable sales in Mequon within the 6 months or so that had stone or partial stone exteriors. I won't swear to it, but as Mequon covers a fairly wide swath I am fairly certain at least a couple could be found in Mequon, but that could still put them miles away if they exist.
 
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