An Appraisal Question

[nubiwan]

Recently had a 2 Apartment property appraised and ran into this situation. Before I start, I personally estimated my property value at $300K, but see no reason why another investor might well pay more considering my income of $2500 per month from 2 units.



The appraiser comped my house with 2 other units. One was a single family that sold for $285K, another was a 2 APT that went for $295K. The latter was smaller, perhaps a little new, the former was about the same size. IMHO both were inadequate comps, but there are not many buildings like mine in terms of age, size etc.



As luck would have it, I actually looked at one of the comps several months before it sold, so I had good idea of it's state prior to this appraisal being presented to me. What the appraiser was not aware of was that this home had a completely unfinished 2nd floor. Now, I do not mean not painted or no carpets. I mean it was stripped down to the studs. It had never been finished at all. There were no walls, no floor boards, no eletrical, plumbing. To get around, you had to gingerly step on the joist on the ceiling below, lets you put your foot through the ceiling gyproc. The access to the second floor was a hatch in the ceiling. There wasn't even a set of stairs to walk up. There was a minimum of 75-100K of work to get this home anywhere near the condition my home was in.



In the final report, the appraiser used the MLS Sales sheet for total liveable area and a value of 2450 square feet was compared with my own value of 2250 sq ft. An amoun the appraiser diligently measured each and every wall and room to arrive at. For my short fall in liveable area, I was dinged -$13K in the appraisal. Because my property was 2 APT, I received a credit of $20K. In my opinion, the apprisal is in error as the home I was comp'ed on has a finished living area of about 1200 feet on the main level. Basement and second floor being totally unfinished. The fact the property still sold for $285K, should reflect favourably on my own property, yet it does not. If anything, I should have received a credit for having almost twice the liveable area in my home. In the end, my property has appraised for $285K.



I have written to the appraiser indicating my dissatisfaction. It took him a couple of my emails and 30 days to get back to me today. I get the feeling (from his response), that I have no right to question his work. Even if I did fork out $520 for the privilige of teh bank (not me) hiring him. At this point, my financing is all in place and it is rather a matter of principal to have this guy admit to his error, and at the very least, be a little more courteous and responsive. I am seriously thinking of taking htis to the BBB if I don't get any satisfaction. His attitude has been completely ignorant as far as I am concerned.



Anyone care to share a thought, reaction on this? What would you do?



Thanks

Tony

 

[nubiwan]

Want to point out further that the mistake the appraiser made was no fault of his own, and I understand this, but surely in light of my information he should admit to the error in his judgement, and adjust his value.



In the end, this is exactly the reason I despise getting appraisals at the best of times. I often feel I am better informed than they might are, yet you are at their whim. They always use comps, like the one I have described, where the condition of the property (inside and out), are not even a consideration, yet you have to live with some wishy washy numeration of data that they make up, and ultimately define your bottom line. Sometimes it can work in your favour as much as it has worked against me in the above example. It is all rather a dark art, and not worth $500 for the service I received.

 

[housingrental]

If you do not need to increase the appraisal do not dedicate more negative energy to this. What good will you accomplish?



A few months ago I had concern on value arrived at and I got an appraiser back a few weeks later and got the appraised value upped by $70,000 and showed comps that supported the higher (and even higher than the upped amount) value.

The initial inspection was outside only though.

The second inspection was inside and the atypical quality of finish was used to justify the variance.



If you did need a higher valuation I would try contacting other people at the same company (if any) with complaint for resolution with a nicely worded letter that shows why the comparable properties were not comparable and the value add of your property. Offer to pay for an additional inspection.

 

[nubiwan]

The appraisal report took him less than a day to complete. I guess he wanted his $520 pretty sharpish.



I sent the appraiser a letter detailing my knowledge of the house he used as a comp the same day I received a copy of the report. I never heard back from him. 2 weeks later I sent a reminder only to get an email indicating that he had been away on holiday, and would look into it in the next couple of days. He did not get back to me. Two weeks later, I sent another email being a little more curt, but not unpolite indicating that I expected a response.



Today, almost a month later, I got some lame explanation delivered by his assistant. The guy doesn't even have the decency to respond directly. In a field where 'timing is of the essence' in such matters, I find this guys lack of attention to be disrespectful, and I want him to know it. I personally want more people to know what kind of service they'll be getting from this appraiser. Perhaps then he'll learn the meaning of the word. Honestly cannot believe he works in this field.

 

[GaryMcGowan]

The bigger picture here is; Bank appraisals will always come in lower than the market value.