Wet area

[David S. Roberson]

I'm looking at an appraisal of a suburban commercial property that has significant water drainage issues, including the fact that at least half of the land is in a sinkhole floodplain area, and regularly floods. The appraiser apparently lacked geographical competence in the area and did not do adequate research to discover this, even though it is clearly marked on the municipal website. The property would obviously require extensive excavation and drainage remediation, but the appraiser didn't report this in his description of the property, nor did he analyze it's impact on value or marketability. His response was "This information is available in public records, however, based on the aforementioned information (FEMA website) I found no reason to investigate further. After receiving the complaint, I did find the referenced map on the "subject city" Planning Department’s website. A thorough analysis of this map shows that a part of the subject property is identified as being impacted by a sinkhole drainage area. In the case of the subject property, the presence of the sinkhole floodplain has no material impact on value until the point in time whereby geotechnical tests and engineering studies have been performed and the results provided by experts in those matters."

My question is, does the fact that the appraiser does not have specific data from geotechnical tests and engineering studies mean there is no "material impact on value", and should not be considered in the opinion of value?

 

[TerryRohrer]

I don't think their CYA will provide much cover. While the engineering may be necessary to estimate a cost to cure, the appraiser should have, at a minimum, sought data pertaining to properties with similar known, but unquantified, conditions and analyzed the impact of the condition on their price. Unfortunately, some can't recognize a golden opportunity to save themselves some grief.

 

[Fernando]

It's good you did due diligence in more research into the issue. You should indicate your findings and disclaimers in your report. It's up to the client/lender in how they want to proceed.

Reminds me of a house that had some water issues. I mentioned it in the report and lender asked more information about it.
I went back to subject to look at the water drainage problem and talk with the homeowner.
Upon further investigation, owners had prior engineering reports on the water problem.
The owners were attorneys and didn't disclose the geological water issue and reports to me until I asked.
I describe the findings and didn't have feedback on my appraisal report. Don't know if lender proceeded with the loan.

 

[Tom D]

We have homes and usages that are built where they shouldn't be built. The problem is that how long ago, and where is that info. In your case, because there was water damage you looked for that info. The local government lets things be built where they shouldn't be built. Does that mean it was ok to build there at the time.

And fernando, you also didn't ask, or look, for the where from water problem issue until the lender asked you about it. This shows that the best of us can also miss the mark. And if there was no water, you would have missed the whole water issue like most of us would have.

 

[Fernando]

We have homes and usages that are built where they shouldn't be built. The problem is that how long ago, and where is that info. In your case, because there was water damage you looked for that info. The local government lets things be built where they shouldn't be built. Does that mean it was ok to build there at the time.

And fernando, you also didn't ask, or look, for the where from water problem issue until the lender asked you about it. This shows that the best of us can also miss the mark. And if there was no water, you would have missed the whole water issue like most of us would have.

Yes, it was my mistake in not initially asking homeowners about the water in the garage.
The rest of the house was immaculate and beautiful condition.
I saw water and noted it in report (afterall I'm not a geology expert).
In future, if something not right, talk with owner in what they know.