Real Estate Appraiser’s Are So Inconsistent
Jeff Cameron’s Fight for An Appraisal
Jeff Cameron, Realtor with The Cameron Team at HomeSmart, helped his buyer find the perfect home. The seller of the home accepted their offer; however we all know that the banks require the home to appraise in order to fund a home loan.
The appraisal for the home came in low, real low… $110,000 lower than the agreed upon sales price. This is a big problem.
So, we went through an analyzed the report and found inconsistencies in their square footage.
Product lines that sold for 35% less than the subject when built were used with no adjustment.
Similar sized lots were used but rather than square like the subject, they were skinny and long and only fitting a much smaller product line.
Regarding the basement, first they didn’t give the normal additional price per sq ft used of $70. He just used a value. Then, he compared the subject to smaller products with differing basements. The subject’s basement is approximately 1,500 sq ft and the comps used had basements ranging from 700-1,000 sq ft with no additional adjustment.
Please see my comments below to justify the value. Let alone a reasonable buyer and a reasonable seller negotiated and came to the sales price. The market priced the home. Take a look and let me know what you think???
The subject property is the Mirador by Toll Brothers. The public loves this floor plan. When you add the basement you get 6,850 sf with 6 bedrooms, a den, a loft, and bonus room in basement. There are 6.5 baths and a 4 car garage.
Please look at the floor plans and basement options to see the differences. The Mirasol floor plan is built sideways as it has to go on a narrow lot.
Comp 1 is a Mirasol floor plan by Toll Brothers.
A.
The last time you could buy a Mirador, subject property, new from Toll Brothers the cost was $1.130 mm (middle). At the same time, the Mirasol (comp 1) was $714k. They are completely different product lines. After that, no lots were available that could fit a Mirador. I looked up and found dated price sheets from Toll Brothers on line.
B.
The county and the builder have it at 3,564 sf versus the appraisers 3,826 sf. That should garner an adjustment. $18k adjustment at $70 per sf as keeping adjustments in line.
C
I have been researching the Internet and found the floor plan for the Mirador basement and the Mirasol (comp 1). The Mirador basement has 2 beds, 2 baths, a huge bonus room and another open area, approximately 1,500 sf. The Mirasol basement has 1 bed, 1 bath, and a bonus room approximately 760 sf. $35k adjustment.
D
The lot size of comp 1 is 7,765 sf compared to the 12,040 size of the subject. comp 2 has a 12,911 sf lot and was deducted $10k for the difference. $25k would be in line based on the other adjustments.
E
He adjusted comp 1 down $50k for condition/upgrades. It is nice, but how much more can you do than granite counters, upgraded appliances, upgraded cabinets and top of the line wood floors? Also, most of the subject was recently remodeled. I’ll give you $20k. $30k adjustment.
That would still be short, just more appropriate. $770.5k + $18k + $35k + $25k + $30k = $878,500. This does not account for $400k difference in base price when new. I also disagree with $8k for a 4 car garage vs 3. They are rare and highly desirable.
Let’s look at comp 2
Comp 2 is a Short Sale that went under contract in April of 2012. It was a Terraza floor plan by Toll Brothers. I have attached the smaller basement floor plan.
A
Time adjust for 1 year ago sale. Adjustment of $107k
B
The Terraza is in a smaller product line, the Cottonwood series. It is 4,700 sf and the smaller basement offered 2 beds 1 bath and a bonus room. It was 900 sf. Adjustment of $25k for the basement difference.
Full adjustment for comp 2 = $783,300 + $107,000 + $25,000 = $915,000
Comp 3
A
Corporate relocation took $50k off price in less than a week. Distress sale.
+$15k
B
$50k for a golf lot on Wildfire golf course? Not a private course and not great views from these lots.
+15k
C
Basement adjustment was $73,200. Based on the SF adjustment used prior, this adjustment should be $102,480. Of which, I believe basement has more value than additional sf upstairs. The basement upgrade costs $150k from Toll Brothers. +$25k
D
Most importantly, this home was built in 2001. As the market surged in 2004-2006 the style of expected upgrades increased dramatically. This home is dated and has cultured marble and dated tile in the baths. +$50k
Full adjustment would be $798,900 + $15,000 + $15,000 + $25,000 + $50,000 = $903,900
Comp 4
This home is another Terraza similar to comp 2, but with no basement.
This home was purchased at the trustee sale and flipped. It sold in 1 day, it is not representative of the market value.
A
2 car garage. For a home of this size this is a dramatic issue. Adjustment of +$20k
B
Basement +$25k additional
C
Product line of this home adjustment of $50k
$789,500 + $20,000 + $25,000 + $50,000 = $884,500
Comp 5
This home is adjusted $500,000 for the lot and Scottsdale address. I would suggest $400,000.
The sf in the MLS does not match the tax by 2,000 sf. Adjustment of $15k
This would have the home comp out right at $900,000.
Comp 6
A
This is a 3 bedroom 3 bath home with no real adjustment for that difference. +$25k
B
It backs the golf course but has a west view. A value Killer +$50k.
C
Slate floors(personal and hard to sell), white carpet and cultured marble in the baths does not garner a $45k Superior adjustment. +$20k
D
Basement should be $100k +$25k
$770,300 + $25k + $50k + $20k + $25k = $890,300
Comps 7 and 8
Neither had a basement. Give the additional $25k for the basement and they are both around $915,000
There is plenty of justification for this home to appraise.
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