I just had my house appraised for a home equity loan.
The house appraised for 114k about 3 yrs ago.
Appreciation rate is about 5% in my area.
We have just about completly remodeled the house.
Our house has a lot of architecture character with great curb appeal.
we have a 550 sq ft apartment/guest house in the back that needs remodeling and we have a 2 1/2 acre lot.
My question is “Is my appraisel fair?”
Why? I was at work when he came, but I left a list of questions with my wife. Such as what we could do to add more value. He told my wife that he loves our house and that he admires it every time he drives by. He also remembered it when it belonged to an older lady who let it go. Well, when my wife asked him how much it would appraise for, he showed her a comp for a house with the same square footage for about 135k. I figured with appreciation our house would go for that without any repairs. What about my repairs, crown molding, fresh paint, new floors, wood floors, new premium vinyl windows, etc. She also asked him about the apartment/guest house and he said that he could not legally add that to the value because we had a single family home. Also asked about our attic finished out, it would add about 1000 sq ft. he said that because the ceilings where so low that it would not be worth fixing up. She asked what we could do to bring more value and he said nothing but time. Is this right? I know that location is key, but the houses that go for about 130k don’t even compare. Is there a price cap. Can you buy a English bungalow totally remodeled with a guest house for the same price as an outdated ranch home. I’m trying to keep my emotions out, but I just don’t understand why architecture and updating does not play a role in the appraisel.
Appraisors are a diffrent breed and dealing with them can be very frustrating. I have two or three diffrent appraisors. They are each different and very unique. One I like to use on the rural properties and another I like to use on the in town properties and one for rehabs.
I just had a similiar (minor) issue on a house that I completely remodeled, new windows, flooring, electrical and I also added an extra bathroom. The After Repair Value of the first appriasal was $132K and a year latter and a complete remodel and it only appraissed at $129K. with appreciation rates about 10% I expected it to be about $139K. The comparables were from similiar size properties but the had all old wiring, plumbing, dated kitchens, old windows, ect and ect. The one house a comparable from almost a year ago. I did fine on the house since I moved into it. This appraisor was picked by the lender, now I give two or three names that I like to use.
Thank you for your reply.
The appraisor was an elderly gentleman, do you think that age may play key in his judgement. He may be someone who does not appreciate architecture. I guess there could be a number of things.
You have to make sure you don’t over do your neighborhood as well. People will only pay so much for a certain size home or a certain neighborhood. That’s when you don’t get out what you put into a house.
Yes, I agree. It is important not to over improve, I did not know that my neighborhood had a price cap on it. I did not know any thing about comps or appreciation, or anything else about real estate until recently. So, it was to late after I had already put in highend windows, Every thing else did not cost too much. It is important to live up to a certain standard, but at what cost? You know what I mean? I would like to know how much my guest house and a finished attic would bring. I know that above grade sq ft is not as valuable as grade, but it has to be the best way to add value without extending my house. I am watching a house that is on the market for 195k. It is 2800 sq ft, 1000 more than mine. if I finished my attic it would add about that. This house needs a lot of updating and has 1 acre less than mine. Of course it may not sale for that. It started at 199k a few months ago, so it could drop even more. It is a story and a half and has very little curb appeal. My house appraised for 114k 3 yrs ago and appraised for 139k this week. I paid 109k and put a little over 30k into it, so I have just broke even or maybe in the hole a bit (the windows is what set me back), but if I am creative and conservative with my repairs, in time it should do well. Man, I sure have learned a lot from my own home, I guess it is better than learning on a real estate deal, it would probably put a more bitter taste in my mouth. I did not how important it is to befriend a few appraisors and a couple of inspectors. ???
I am an appraiser, and I understand your concern. I have to say the appraiser followed the rules regulated by the appraisal board and USPAP Standards. He could not add the GLA of the guest quarters unless it was attached to the single family dwelling. He can give credit but it will not be the same as the main living area, and it must be heated and not have any functional obsolecense. I understand the many improvements you have made and it does make a difference, but not in the appraisal process. You have to understand it is sometimes physicaly impossible for an appraiser to gain access to the comparables chosen, because some people just will not allow you to no matter how you try and explain to them what your purpose is. The difference it makes falls under “market appeal”, if you were to put your home on the market, would the individuals all like or dislike what you have done? If you have a copy of your appraisal, look at page 1 of the URAR in the section General Descrition, Foundation, and Exterior Descrition you will notice that it does not ask, nor is there a place for dollar adjustments. An adjustment could have been made for some of your improvements in the sales grid on page 2, but only if the comparables were obviously inferior to yours, but if it is not obvious the appraiser has to assume the comparable are similar to your property simply by location, GLA, and condition, with the extra ordinary assumption that it has very similar amenities. Location adjustments could have been deemed necessary if you are in a better location than the comparables or vice-versa. Please in no way be offended, you have to realize that it is simply an “Opinion Of Market Vale” who know’s he could be way off the mark, or he could be right on it, but it is not a set value on your property, and could be worth much more than that to the right buyer, or it could be worth a lot less. Appraisers all do appraising differently, make adjustments differently, figure Price Per SqFt differently, and some even commit fraud. You should be proud of what you have done, and keep doing it, but always make sure you never “OVER IMPROVE IT” and believe me it is possible and you will never see the money you put into it. One more thing, the only possible way I can percieve him not counting your unfinished 2nd, is if it is not heated which I assume it’s not because it’s not finished, if the cielings are 5Ft or lower, and if it does not have a permanent stairway ;). I hope I was of some help to you, and it sounds like you have a really nice home.
Thank you for your reply. He did say that we could get more if the right buyer came along, but I thought the a bank or such would not lend a dollar over the appraisel. You right, the second floor is not heated, but the ceilings are at least 6 1/2-7 ft, I am 6-2 and I walk under them just fine, If need be, I could raise them a bit. The hvac system is large enough to accomidate the finished attic. It does have perminate stairs. I was not expecting him to count the attic in the appraisel, but had my wife to ask what value it would add. He thinks that it would not have a good return, but I believe if I do the work myself that I could get a decent return. That way I do not have to skimp on materials. I just need to do my research and do most of the work myself.
I hope I was of some help. Also I would like you to know that although it is not heated, or finished he still could have counted it. If you take a look at your appraisal on Page 2 in the sales grid under “Basement and Rooms Below Grade” he could have given you partial credit due to it having a permanent stairway. I can not speak for the appraiser, but I know from experience that it could have been counted and given partial credit "25% to 35% of the price per GLA (actual Heated Living Area). That way you still would have recieved credit for it. It would have been seperated from the Heated GLA, kind of like I tried to explain the guest quarters, but with a substantial difference due to being attached to the main dwelling, and able to be converted. My professional opinion is that he should have counted it, due to “If Finished and already having a Permanent Stairway” it would be completely functional, the cieling height appears to be of standard height. You might consider a value dispute with the appraisal board, in return they will do a field review done by another appraiser, and it might identify things the first appraiser missed or maybe did incorrectly.
;). I hope I was of some help to you, and it sounds like you have a really nice home.