Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The appraiser should not have mentioned anything about the "iffyness" of the comp that was provided. If he felt that the comp would not be adequate to support the value of your home then he should not have used it, period. .
If the appraiser had problems with one of the comparables, and there were no better comparables to be found, he should have 1) explained what adjustments were made, 2) the basis for the adjustments, 3) explained in detail how the issues with the comparable were resolved.
As an example: Assume there is a superior amenity......lets say a tennis court.....on the comparable site, and that makes it appeal to a specific market rather than the typical market. An adjustment might be made that would use the depreciated cost approach, assuming that the specific market, wanting or needing a tennis court, would be willing to buy a new one if they couldn't get a house with the tennis court. BUT, assuming a tennis court has a life expectancy of 10 years (This is from the NAHB Life Expectancy chart), and the cost for a concrete tennis court (according to Marshall and Swift) is between $28,500 to $43,750, and assuming it lies in the middle of the cost ratings (it isn't the cheapest, it isn't the most expensive) we can assume a cost of $35,000. If it is 5 years old, then it's contributory value would be somewhere around $17,000 (50% of the cost new and assuming a depreciation of 50%). Putting that in the comments, explaining where the numbers come from and how they were derived and how they are supported will assure the lender that the appraiser isn't just making wild a$$ guesses. Virtually any attribute for unique features or significant differences can be adjusted this way. You MUST Hypothetical Condition it as a specific market feature......that a buyer for houses with this feature will not pay more than the depreciated value of the feature. There needs to be sales of similar properties in the history of the community, and using a paired analysis, determine the value of that feature for the year it was purchased, then time adjusted to the present. Doing it this way will provide two approaches of support for the feature, even though it is unique. The problem with doing this kind of work is that it takes a lot longer to do, and the loan officer wants it back tomorrow (24 hour turn time) and they want to pay the lowest price they can get away with.
Last edited by Goodpasture; 06-01-2008 at 05:13 PM..
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
