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Thursday morning review rant

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Ed Falkowski MAI SRA

Thread Starter
Senior Member
Joined
Jun 25, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
Ok - here's the situation:

I'm doing a review (duh!). Here are my main discrepancies:

1.) The original appraisal states a 10% positive, across-the-board adjustment for "view" to all of the comps. The "view" is of a creek which is overgrown by brush and, in this market, is considered an "attractive nuisance".

2.) Page 1 of the URAR has 0% for "multi-family" present land use. The subject is DIRECTLY ACROSS THE STREET from an apartment complex and is less than 0.25 miles from another! Was this mentioned? Um... no.

3.) Description was noted of an "ultra-modern" kitchen with oak cabinets and granite counters. Does this sound "ultra-modern" to you? I mean, can see things like concrete counters, Viking stainless steel appliances, sub-zero refrigerator, heated tile floors... all of that being "ultra-modern", but oak cabinets and granite counters? Further, are there interior pictures to back this up? Of course not.

Overall, from a brief review standpoint, I can tell that whoever did this appraisal obviously put some effort in trying to at least explain where he/she is coming from. Also, there are a lot of good addenda that I found in this appraisal (some of which I may use for myself!) and I appreciate the work that was done on the sketch to really show the inside of the property (it wasn't just a labeled box as I usually see on most reviews). Also, I recognize the difficulty of this assignment as the property is a different style (rare bi-level in this area: functional obsolescence) on a busier road next to a creek (external obsolescence)... however... all of this doesn't do any good if you don't properly analyze the subject and if you pick comps which, from what I can tell, are "looking for a number". Plus, the subject had just sold a little over a year ago for 10% less than what it appraised for now and, in doing a little bit of side research for myself, I can't see where ANY appraiser could have appraised it for that value back then either as there was NOTHING which sold around it that even sniffed that value (and, believe me, the property is nothing to write home about). However, I believe that to be outside the scope of my assignment and won't make any mention of that in my review report... but then how do I tell my client that the market really isn't "declining" (the market is actually pretty stable where the subject is located)?

Ugh - I've been working on this for half of the day yesterday (inspection and driving by comps) and since 6:00 AM this morning. However, there is one silver lining in this cloud: this review is for an AMC and they are definitely NOT paying a standard AMC-type fee for this one (it's already been approved). :icon_mrgreen:

Sidenote: I give whoever did the original appraisal credit - they actually DID inspect the comps from the outside and did not put in MLS photos. However, I am unsure of the speed of the appraiser's car during this "inspection" as it is clear as day that the comp pictures are blurred because the car was never stopped when the picture was taken. Are there any USPAP laws that limit the speed of an appraiser's car when "inspecting" the comps? :laugh:
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Reject the 10% creek adjustment as unsupported and you're back to the prior sale price. The subject might be good comp for itself in a slow market.
 

Ed Falkowski MAI SRA

Thread Starter
Senior Member
Joined
Jun 25, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
Reject the 10% creek adjustment as unsupported and you're back to the prior sale price. The subject might be good comp for itself in a slow market.

Good thoughts on both points, Greg. I had thought about using the subject as a comp for itself as there haven't been any bi-level sales on the entire map page within the last year and some scattered "raised ranches".

That brings up another question - the subject is called a "bi-level" which has 1 story and a finished basement. Isn't the use of the term "bi-level" then misleading/improper?
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
First, if you can't prove the description of the condition of the subject is improper, you have to accept it. You have an argument with "ultra-modern". That's verbage. You cite oak cabinets and granite countertops. Fine. That's a specific description. You argue about concrete counters. I've actually found they can contribute less than granite. It all depends on the market acceptance of the amenities. Don't get hung up on personal preferences.

Second, you commented that nothing had sold in the price range of the subject. That should be reflected in the neighborhood analysis. As an example, the reviewer examined sales within the last.... months prior to the date of the appraisal. Sales ranged from x to y, with a predominant of z. Within these sales, sales of homes of the size of the subject (zzz SF to zzz sf) and similar in age sold for zzz to zzz. It is noted that the appraised value of the subject exceeds the disclosed sales prices for similar homes in the market. No comment is made that the subject is outside of the neighborhood price range.

You comment about the creek adjustment. Prove that the adjustment is not warranted or is warranted by actual sales, not opinion.

Finally, you must support your findings. Your "experience" is not a finding. You must identify, prove and support all findings that contradict the origination appraisal. Three sentences that say, the sales were not appropriate, is not sufficient, or three sentences summarizing your adjustments. Analyze, state, support and prove.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
the subject is called a "bi-level" which has 1 story and a finished basement. Isn't the use of the term "bi-level" then misleading/improper?

Is it a house over a hole in the ground or a split-level where the lower floor area is against the grade on one or more sides?
 

Ed Falkowski MAI SRA

Thread Starter
Senior Member
Joined
Jun 25, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
Is it a house over a hole in the ground or a split-level where the lower floor area is against the grade on one or more sides?

It looks like a 2-story (the upper level being slightly larger than the bottom and the main area/kitchen/living room/dining room is on the upper level). The lower level is 50% above-grade on all sides.
 

Ed Falkowski MAI SRA

Thread Starter
Senior Member
Joined
Jun 25, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
First, if you can't prove the description of the condition of the subject is improper, you have to accept it. You have an argument with "ultra-modern". That's verbage. You cite oak cabinets and granite countertops. Fine. That's a specific description. You argue about concrete counters. I've actually found they can contribute less than granite. It all depends on the market acceptance of the amenities. Don't get hung up on personal preferences.

I realize your point about concrete counters. I'm not getting hung up on that or any other "personal preferences". My beef is with the lack of clarity on the original appraisal regarding an item which was given a significant positive adjustment without significant support to back it up.

Second, you commented that nothing had sold in the price range of the subject. That should be reflected in the neighborhood analysis. As an example, the reviewer examined sales within the last.... months prior to the date of the appraisal. Sales ranged from x to y, with a predominant of z. Within these sales, sales of homes of the size of the subject (zzz SF to zzz sf) and similar in age sold for zzz to zzz. It is noted that the appraised value of the subject exceeds the disclosed sales prices for similar homes in the market. No comment is made that the subject is outside of the neighborhood price range.

Thank you for the lesson on how to perform a review, however, I am already aware of all of how to document a proper neighborhood analysis and already have a 3 page addendum regarding it in my review.

You comment about the creek adjustment. Prove that the adjustment is not warranted or is warranted by actual sales, not opinion.

Again, I am aware of how to prove/disprove adjustments and this is not just my opinion (I even spoke to both of the agents involved in the original sale and they both said the "attractive nuisance" words). Also, I have scoured the MLS and other sources looking for similar sales with creeks and there is nothing within a 10 mile radius. Therefore, if no sales exist with which to prove an adjustment then no adjustment should be present. Therein lies my problem with the significant positive adjustment given on the original appraisal - where did it come from and how was the amount ascertained? Unsupported adjustments are a USPAP violation, but that's another issue.

Finally, you must support your findings. Your "experience" is not a finding. You must identify, prove and support all findings that contradict the origination appraisal. Three sentences that say, the sales were not appropriate, is not sufficient, or three sentences summarizing your adjustments. Analyze, state, support and prove.

Again, thank you for the lesson in Real Estate Appraisal 101.
 

Scott Kibler

Elite Member
Joined
Oct 7, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
It looks like a 2-story (the upper level being slightly larger than the bottom and the main area/kitchen/living room/dining room is on the upper level). The lower level is 50% above-grade on all sides.

Around here that would typically be called a bi-level.
 

Ed Falkowski MAI SRA

Thread Starter
Senior Member
Joined
Jun 25, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
Around here that would typically be called a bi-level.

Ok - I agree with that. I just wanted to get some confirmation on that.

Scott - I couldn't help but see your Southern Illinois Salukis icon... sorry that my UD Fightin' Blue Hens had to beat up on your team in the D-IAA football (now FCS) playoffs. :icon_mrgreen: I guess your team wore us out, though... because we got trampled by Appalachian State. It figures... they start out the year by beating Michigan and they end the year by beating UD... and both teams have the exact same uniforms. Poetic justice!
 
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