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Valuing Additional GLA When Comparable Are 1,000+ Sq Ft Smaller

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abbgarden

Freshman Member
Joined
Dec 4, 2017
Professional Status
General Public
State
Ohio
Would really appreciate some professional insight on a recent appraisal for an FHA refinance with cash out. Totally respect the appraiser and their valuation process for our property however they assigned an $8 per sq ft GLA for the 812 additional feet in our home over their identified primary comparable house five doors down. Is $8 per sq ft a fairly standard GLA valuation? In looking at other posts by appraisers in this forum I am seeing values more like $10-12 for unfinished space and $30-50 for finished sq footage.

Both houses were considered in good condition and we were credited for our additional bedroom and bathroom. All sq footage in both homes are finished. Appraiser made the following notation, “the home is not over built or super adequate for the area and the larger than typical GLA is not felt to impact marketability or appeal”.

In my reply to the lender I included the following: Please note that the lowest per square footage rate for all comparables in the appraisal was $82.31 per square foot. Based on the appraisers valuation of our property, which happens to be 104 sq ft smaller than the $82.31 comparable (which doesn’t have a garage and ours has a 2 1/2 car garage), ours is only valued at $68.41 per sq ft. I haven’t seen anything listed at that low of a square footage price in our area or nearby cities unless the property was in need of significant repairs.

We recently had an offer for $220k on our home and the bank originally said they estimated our house to appraise around $218k, so we were really surprised by the $202,500 appraisal value, especially with all the updates we have done ($20k) in the past 10 years. We paid $198,500 in 2002 and the market here is better now than it was then.

Please tell me if this appraisal value seems fair and if not do you have suggestions for any action we can take. Additional comparisons didn’t help because they were chosen from a nearby city where the houses are valued lower due to the school system, and the appraiser use the same eight dollars per square foot GLA as well as the same nearby house as the primary comparison. Nothing changed. Thanks to all who respond.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
We don't assign value,
We extract it from the market.

We measure the homes we go to.
We rely on the measurements of others for the homes we did not go measure, such as the comparable sales.
Sometimes, those measurements of the comps are not exact, as Tax Assessor's and Realtors do not always measure to the inch,and sometimes the don't always measure the little cutouts and bump-outs that come from years of additions. Hence rounding issues can rear their ugly heads, when homes are more than one story perfectly rectangular with exterior walls that end in round feet, without inches that have to be calculated in, or rounded off.

If the market is paying $8 a square for the additional utility of additional SF you'll be able to see it in the numbers if some comps are bigger, some are smaller, their adjusted sale price should be between the most expensive comp price and the least expensive comp price.

The best way to think of the difference between what home sell, per square foot, and why a square foot adjustment differs from that price, is to consider how much one tire costs for your car. $150, $250, whatever it is, now pull one tire from your car, and try to sell it for the "value" of what that tire cost. Or, consider when you buy a car, you are paying for it by the price per wheel, then ask the deal how come all the cars have a different price per wheel, when they all have four wheels and run when you start the engine.

...
 

ucbruin

Elite Member
Joined
Mar 11, 2014
Professional Status
Certified Residential Appraiser
State
Massachusetts
I agree with ucb....(dupe post-:))
 
Last edited:

residentialguy

Elite Member
Joined
Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
In regards to just the GLA question, $8.00/sf seems low to me, in general.
Same here...unless it is due to super-adequacy of an overly large home and the market isn't paying that much for the additional size.
 

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
OP-What is the size of your home and the sale in question? What type of design is your home?
 

Dublin ohio

Senior Member
Joined
Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
When you refer to "finished" area. Is that including a finished basement?. If not. Then I assume that your house has approx. 2960 sf above grade. If you are including finished basement. Then it becomes a little more complicated when comparing "finished" area. The values per sf you reference in your post would appear to show a very wide spread in comparable sales prices. Something does not add up
 

Tom4value

Senior Member
Joined
Dec 4, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Would really appreciate some professional insight on a recent appraisal for an FHA refinance with cash out. Totally respect the appraiser and their valuation process for our property however they assigned an $8 per sq ft GLA for the 812 additional feet in our home over their identified primary comparable house five doors down. Is $8 per sq ft a fairly standard GLA valuation? In looking at other posts by appraisers in this forum I am seeing values more like $10-12 for unfinished space and $30-50 for finished sq footage.

Both houses were considered in good condition and we were credited for our additional bedroom and bathroom. All sq footage in both homes are finished. Appraiser made the following notation, “the home is not over built or super adequate for the area and the larger than typical GLA is not felt to impact marketability or appeal”.

In my reply to the lender I included the following: Please note that the lowest per square footage rate for all comparables in the appraisal was $82.31 per square foot. Based on the appraisers valuation of our property, which happens to be 104 sq ft smaller than the $82.31 comparable (which doesn’t have a garage and ours has a 2 1/2 car garage), ours is only valued at $68.41 per sq ft. I haven’t seen anything listed at that low of a square footage price in our area or nearby cities unless the property was in need of significant repairs.

We recently had an offer for $220k on our home and the bank originally said they estimated our house to appraise around $218k, so we were really surprised by the $202,500 appraisal value, especially with all the updates we have done ($20k) in the past 10 years. We paid $198,500 in 2002 and the market here is better now than it was then.

Please tell me if this appraisal value seems fair and if not do you have suggestions for any action we can take. Additional comparisons didn’t help because they were chosen from a nearby city where the houses are valued lower due to the school system, and the appraiser use the same eight dollars per square foot GLA as well as the same nearby house as the primary comparison. Nothing changed. Thanks to all who respond.
First off, appraisers do not (or are not supposed to) derive the $ adjustment from an appraisal forum. It is derived from the market.

While the appraiser may be correct that your house was not overbuilt in that marketability would be adversely affected, I.e., “I will not buy this house because it is too big.” There could be an argument for the law of diminished returns. This means that a buyer may pay $5,000 more for your house if it was 100 square feet bigger than a comp ($50/sqft) but they wouldn’t pay $40,000 more if it is 800 square feet bigger. At $8/sqft, the appraiser is saying a buyer may only pay $6,400 more for the extra 800 sqft. Any more and the price may be too much for the buyer’s needs/wants.
 

sandpiperapp

Senior Member
Joined
Apr 5, 2011
Professional Status
Certified Residential Appraiser
State
New York
Dis you say that you were credited for an additional bedroom and bathroom? Maybe the appraiser did not want to double dip and adjust for the additional GLA as it may have been accounted for in the adjustment for the additional bedroom and bath. I typically do not adjust for additional bedrooms in many markets, as the value difference is reflected in the GLA. Maybe this appraiser did the same.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
To the OP:

Conjecture will not aid your cause or resolve the perceived issue. Courses of action: >>

1. send the info you posted to your Lender and request they have a Field Review Appraisal done on the appraisal report in question OR
2. retain the services of a Local, Experienced Certified Residential (or Certified General Appraiser who does residential as well) to review the report in question.
 
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