Three Story Home

[Richard J. Glesser]

I've appraised many homes, primarily historic in nature, which have three levels. I agree that the appraiser should have included the third level as square footage based upon your description. He most likely was unfamiliar with such homes being more of a suburban appraiser.

However, while the Cost Approach would definitely rise, if properly done, if he compared your home to similar homes treating all equally in the Market Approach, the value will remain the same since the Cost Approach on such a home of that age is very unreliable due to estimating obsolescence. Most residential appraisals, unless new constructions, hang the value on the Market Approach.

I'm happy you secured your financing but believe that even if the appraiser would redo the appraisal including the 3rd level in square footage, he appears to be astute enough to treat the comparables equally and, thus, end up with the same value. :usa:

 

[Nancy Jackson]

Originally posted by Richard J. Glesser@Jul 15 2003, 10:07 PM


I'm happy you secured your financing but believe that even if the appraiser would redo the appraisal including the 3rd level in square footage, he appears to be astute enough to treat the comparables equally and, thus, end up with the same value. :usa:

Thanks Richard,

I do realize that my value would most likely not change with inclusion of the third floor square footage. I just feel the appraisal does not accurately describe my property. By treating the comparables in the same way, the appraiser came up with what may be the same value, but in my thinking, he took three wrongs and tried to make a right. My square footage is inaccurate, as is my room count. The square footage of the comparables is inaccurate, as is their room count.

He considered my third floor as an improvement, when it was always finished living space, ever since 1888. It is not and was never an attic.

I do not feel I will be able to get this changed, because my lender does not seem willing to take the time to push for a change. The house was valued at a high enough figure for them to lend me the money, so they are done with it.

I believe I found the Fannie Mae Guidelines on the internet, but I did not find anything in them about how to treat third floors or attics. I did find references to below grade and above grade space. Three stories up is definitely above grade.

I am an accountant, and that may be why I tend to look at detail, not just the end figures.

 

[Bill_FL]

Nancy,

I see that many here have addressed the issue of ceiling height, etc. My question is the level of finish. Is the thrid floor finished with the same quality materials and workmanship as the first and second floor? Or, does it look more like a finished attic, even though it is heated and has the appropriate ceiling heights.

Mansard roofs were designed in by the French. In old France, the property owner was taxed on the number of floors their property had below the roof line. Many old homes had 3 floors. By developing the that roof line, the architecht, Mansard, was able to reduce peoples taxes by being able to consider the upper level an attic, as it was "above" the roof line. If the appraiser has taken a class in historic properties or has alot of experiniece with that type of home, this may be where he got this.

If it were me, I would probably consider the level as a 3rd floor in my living area calculations only if its quality and workmanship were the same as the lower 2 levels. If it was a quality below this, I would tend to call it a finished attic.

 

[Nancy Jackson]

The quality of workmanship and materials is the same as the first and second floors.

 

[Walter Kirk]

Has anyone considered the fact that this house has only 1 1/2 baths. I have appraised many old three story houses and they don't commonly have baths on the third level. Some underwriters want extensive comments and adjustments for functional obsolescense because of the lack of a bath on the same floor as a bathroom.

Perhaps the appraiser anticipated this type of problem and prepared his appraisal to avoid this pitfall. Since he treated the subject and comparables the same way, he arrived at the correct market value.

 

[Nancy Jackson]

I do not believe the way the appraiser handled it had anything to do with the number of baths or where they are located.

I think he was not familiar with older urban properties or three story homes.

I do agree the estimate of value would be the same, but according to Fannie Mae Guidelines, which the appraiser vehemently said he followed,

"The appraiser's role is to provide the lender with an accurate and adequately supported estimate of value and a complete & accurate description of property."

I may just be a proud and sensitive owner of an old home, but I do not feel the appraisal came even close to accurately describing my property, not in terminology, not in gross living area, not in room count.

I think the appraiser should redo the report, but I do not think my lender will take the time to push it. I will just write a letter to my lender, ccing the appraiser, expressing my concern.

Thanks for the information. Those who responded have been very helpful.

 

[Richard J. Glesser]

Nancy,

I can agree with your sentiments regarding having everything accurate and complete on the appraisal report. I have appraised many historic homes and prefer to do them when the market is slow so that I may give the home the attention it deserves. This includes, not only correct living area and number of stories, but also features of the home including possible unique woodworking, flooring, and trim which can no longer be duplicated in the marketplace. This is done by lengthy addenda or narrative descriptions and photos which take substantial time.

In this case, I believe the purpose of the appraisal is very important. If I remember correctly from your first post, the purpose was to refinance. The appraiser, we have agreed, has reached the correct value as indicated by the marketplace and you have closed on and received your loan. At this point, the purpose of the appraisal has been satisfied.

The appraiser, if like most of us currently in this business, faces piles of appraisal requests each day whic he would like to have completed and out the door within a week; but due to the current demand, is taking up to 5 or 6 weeks. He's also buried in phone calls from lenders who still want the appraisals in 3 days from time of order. There are also many sales due to the attractive interest rates and season where realtors have written into the contracts mandatory closing dates which are not practical in today's market. Reprots for home such as yours which deserve additional narrative are merely getting the blanks filled in correctly and reaching a defendable market derived value. While some factual data may not be correct in your view or even in another appraiser's view, the process he took in comparing like properties equally is imperative. (A major flaw would have been to call yours an attic and the others finished living area, thus lowering your value.)
At this point, with the many files sitting on the appraiser's desk to be completed which have not closed and funded, correcting your appraisal is not a good use of time. While you'll be happy, someone and probably two people, will have to wait another day for their appraisal and, in turn financing, to be completed. I think you also mentioned you were a CPA. This request is akin to my asking you to correct 1 or 2 items on my tax return you prepared in February which will not make a difference on my refund, but will correct in data......and I'm making this request on April 15th. I know my CPA would tell me not to worry about it and leave it as is.

I have done complete narrative reports on historic homes which fully describe their features with the purpose only being ownership pride. These cost far more than a standard refinancing appraisal but may meet you personal needs in this case. :usa:

 

[Nancy Jackson]

Richard,

You make some very good points. I am not a CPA, but as an accountant, I do understand what you are saying.

I think I will just send a letter to my lender to put in my file and be done with it. I have learned a lot in this process, and for that I am grateful.

Thanks

 

[Pamela Crowley (Florida)]

I'm glad you came here and asked. I will agree with Richard that the report probably could be better than it was, but the error is not substantial for it's purpose and use.

Maybe referring the appraiser to this thread in this forum along would also be a good idea. We are mainly here to help each other become better appraisers along with commiserating with each other over the pressures of this business.

 

[Bill_FL]

Ok, all of us, would you want an appraisal out there that was not correct? If Nancy is correct, and the appraiser is wrong. I would fix the appraisal. Maybe that's just me, but I would do it if I was wrong.