Appraisal Question (negotiation, agent, sales, banks)

[almost3am]

Hey, I got an appraisal question, I haven't really thought of this one before, but it is happening to me. I went to contract in a house and had an inspection done and the inspector is concerned about the shingles on the roof, he says it has major problems. The banks gets the appraisal done and the house appraises out.

My Question: When the appraiser appraises, does he/she assume that there is a certain life in the roof or is it an appraisal as-is? I guess I always assumed the appraiser assumed all the parts of the house were in working order and he wouldn't know whether something was functioning or not. I asked for a new roof and the seller said it appraised out in its current condition, but I guess I disagree with that. I thought the appraisal would be for a house in working order.

[Annemieke Roell]

Most likely, the appraisal was done "as is", depending of the Scope of Work. Whether or not the roof needs to be replaced is a point of negotiation between you and the seller. Unless the roof is in such bad shape that it would not pass FHA guidelines (if this was an FHA loan).

There really is not enough information in your post to respond in detail, but if the appraisal came in high enough for the agreed on sales price and the inspector passed the roof with not too many issues, there doesn't seem too much to kvetch about.

[chet everett]

Inspectors do NOT consider VALUE, they report on CONDITION.

An appraiser will consider RELATIVE CONDITION in assessing value, but the range of acceptable condition is MUCH WIDER than any competent inspector would allow.

It is ridiculous for a seller to listen to any information from an APPRAISAL to make improvements /concessions and the ONLY time any sane seller should make adjustments is when the property does meet the lenders appraisal.

As a buyer it is SMART to use the CONDITIONS from the inspection to seek the best deal and if there are issues that would cause the property NOT to meet standards of FHA (if that is the path you are trying to borrow on) it is SMART for the SELLER to get the place fixed up and sold.

OTOH if a buyer has agreed to a purchase and something PRETTY OBVIOUS like a roof is NOT factored into their offer it is NOT PRUDENT to try and use some 'scare tactic' type inspector of doom report to sweeten the deal...

[almost3am]

1. Not FHA, conventional, but the bank is being really strict on many things.
2. How do I know if the appraisal was done "as-is"? The bank ordered it and I got a copy.

I was concerned about the roof before our offer, but the selling agent said they got a roofing guy to say it had 5-6 years of life left in it (I never saw that in writing). We came to an agreement on the house, did the inspection, the inspector wrote a bunch about the roof and said it was in bad condition when he went up there. I had a roofing guy come out and he said I should replace it.

The appraisal talked about lack of updates to the house, which we factored into the price. There was no mention of the roof. We thought we had time to save for the roof, but now we don't.

But anyway, my question is surrounding my response back. In the most recent counter back from the seller he said "the house appraised out in current condition". I guess I thought that the appraiser woudn't know the current condition of the roof, as I assume he didn't go up on the roof. So, I assumed the appraiser appraised it with a functioning roof, whatever the age. That was what my question was around, not vital info, but could help my argument.

Thanks for the reposnes so far, I appreciate them.

[chet everett]

I know about a dozen roofers. If I asked any of 'em to get up on a roof they would all say "I'd replace this sooner instead of later". Now, IF there are actual broken / missing shingle tabs you can patch in to prevent leaks, and that is very cost effective, but as new roof is a 20+ year proposition it really is not something that a seller is gonna feel good about.

Lack of "updates" is VALUE thing, not a CONDITION thing, which as I said you have to wrap your mind around...

[almost3am]

Originally Posted by chet everett

I know about a dozen roofers. If I asked any of 'em to get up on a roof they would all say "I'd replace this sooner instead of later". Now, IF there are actual broken / missing shingle tabs you can patch in to prevent leaks, and that is very cost effective, but as new roof is a 20+ year proposition it really is not something that a seller is gonna feel good about.

Lack of "updates" is VALUE thing, not a CONDITION thing, which as I said you have to wrap your mind around...

Thanks for the responses Chet. Yeah, I get that the lack of updates is a value thing, that was built into our offer, the roof needing to be replaced wasn't. Anyway, we made a final counter back to the seller, if they can, if not we will be moving on and they can deal with the roof with the next buyer. I read through the appraisal again last night, he noted that the house was in average condition and defects were beyond the valuation, so I think I had it right all along. Anyway, we'll see what happens.

[Annemieke Roell]

Let me ask THIS question. Is the roof leaking? Is there any evidence of leaks on the ceilings in the house?

You can tell how the house was appraised by looking on the second page of the actual URAR .... the page where the comparable sale grid is. On the bottom of that page is the value and there are 4 boxes that can be checked off of which one is "as is".

One final thought. If the selling agent stated that the roof still has several years of life in it and the inspector said it is so bad that it needs to be replaced right away, I would have a word with the selling agent and clarify all this.

As an aside ... yes, we check the roof FROM THE GROUND and check the ceilings of rooms on the floor immediately beneath the roof for evidence of leakage. Appraisers are not inspectors and while many of usd have the construction background, roof inspection is not in our Scope of Work and exposes appraisers to liabilities they are not equipped to deal with.

[almost3am]

Originally Posted by Schousse

Let me ask THIS question. Is the roof leaking? Is there any evidence of leaks on the ceilings in the house?

You can tell how the house was appraised by looking on the second page of the actual URAR .... the page where the comparable sale grid is. On the bottom of that page is the value and there are 4 boxes that can be checked off of which one is "as is".

One final thought. If the selling agent stated that the roof still has several years of life in it and the inspector said it is so bad that it needs to be replaced right away, I would have a word with the selling agent and clarify all this.

As an aside ... yes, we check the roof FROM THE GROUND and check the ceilings of rooms on the floor immediately beneath the roof for evidence of leakage. Appraisers are not inspectors and while many of usd have the construction background, roof inspection is not in our Scope of Work and exposes appraisers to liabilities they are not equipped to deal with.

The roof is not leaking, that is one of the issues. They say not leaking = no prob. i say missing shingles=problem VERY soon. The selling agent is no longer responding to requests for info about the roof being acceptable. I think she was stretching the truth about what she found out.

The inspector went on the roof because that is his job, not the appraisers job. I didn't see missing shingles or exposed decking from the ground, but the inspector did. I assume the appraiser didn't see the problems either, I don't blame him for anything.

Anyway, I offered to pay for part of the roof as my final offer, to get the deal done. He can take it or leave it today, otherwise we move on.

Thanks!

[chet everett]

If the seller could have afforded a whole new roof I suspect they would have done that a long time ago -- you can't really expect them to cough up dough for something they won't use.
It would be like asking someone selling a used car to put on new tires!
Now if the car literally had flat tire I would expect that the seller would get that patched.
The way to deal with missing shingles is to replace them, not put on whole new roof.

[almost3am]

Obviously we are different. If I was buying a car that had bald tires I would make a lower offer, so I could buy new tires. If I didn't know it needed new tires but had the used car inspected before buying and I was told it needed new tires, I would either lower my offer or find a different car.