House appraisal question

[emilymad]

We are in the process of refinancing and just got our appraisal back. We have some issues because we aren't sure the square footage is right. We need to figure out where we are off. My question is regarding the listed comparables. There are 7 comparables listed and each one has a price per sqft. If I average those it doesn't come close to what we were given as a price per sqft. Should it? We live in a townhouse community so the houses aren't that different. All the comparables come from our neighborhood. Also, does the house being an end unit or not affect the appraisal?

 

[disneyandme]

An end unit can make a big difference in price-- I know where we have looked it the past, as much as 10% more.

 

[tambam500]

Mine came back low too so i contacted my real estate agent and had them provide a few real comparables and the mortgage company accepted those. Call them up and ask...is it so different that it is effecting your rates or preventing you from refinancing though?

Good luck

 

[wdwfamilyinIL]

Our appraisal was very low considering how much we have done to our home, I think the overall housing market is taking an impact on all.

 

[emilymad]

Our first issue is that this appraisal is showing our house 200 sqft smaller than an appraisal we had done a few years. We are going to double check the measurements ourselves.

Another issue is that all but one of the comparables are 800 sqft less than our house. In our minds, I would think they would take the average price per sqft from the comparables and then apply that to our square footage but that didn't seem to happen.

 

[Angeni11]

Also remember if that sq. footage is in a basement it is calculated differently and not worth as much.

 

[seashoreCM]

If the appraiser forgot to use some of the information or used incorrect square footage or other incorrect information then he should be prepared to re-do the appraisal.

On the other hand, the appraiser has some leeway because evaluating the information is subjective.

An appraisal should take into account "cost", or how much it costs to build the house, as well as "market" which takes into account what similar property sold for recently.

 

[LilyWDW]

Our first issue is that this appraisal is showing our house 200 sqft smaller than an appraisal we had done a few years. We are going to double check the measurements ourselves.

Another issue is that all but one of the comparables are 800 sqft less than our house. In our minds, I would think they would take the average price per sqft from the comparables and then apply that to our square footage but that didn't seem to happen.

One thing to remember about pricing by square foot is that it is not always a straight line application. What the square footage is (bathrooms, kitchen, basement, finished, unfinished, ect) and what amounts the square footage is compared to others can really skew the amount per square foot. There is a lot more that goes into appraising the home.

 

[emilymad]

Thanks all for the responses!

We have removed the basement and garage square footage and are still missing 200 sqft.

All the comps are in our same townhouse community, same floor plan, comparable finishes, etc. Some comps are 3 bedroom and 2.5 bath and ours in 4 bedroom and 3.5 bath hence the additional square footage. Number and size of the main living areas is about the same. We actually pushed our back wall about by 4 feet so our kitchen and 2 of the bedrooms are bigger. What else would go into the calculation? It basically looks like the appraiser took the lowest price per sqft from the comps and used that instead of taking into consideration all of the comps.

 

[shruley]

I don't know the specific answer to your question (we had issues with our last appraisal too, and it was all confusing). But I do know that when looking over refinancing issues with our banker, she cautioned us that ALL their appraisals were coming in really LOW! We were wanting to get rid of PMI, and she told us we're better off just waiting til we've fulfilled the original terms, because if we did anything requiring a new appraisal we'd be out of luck. I would guess it's just the market right now!

 

[JoiseyMom]

I don't know the specific answer to your question (we had issues with our last appraisal too, and it was all confusing). But I do know that when looking over refinancing issues with our banker, she cautioned us that ALL their appraisals were coming in really LOW! We were wanting to get rid of PMI, and she told us we're better off just waiting til we've fulfilled the original terms, because if we did anything requiring a new appraisal we'd be out of luck. I would guess it's just the market right now!

The market is regional. We did a refi and our appraisal was just fine.

 

[alex9179]

You also have to take into account what the market in your neighborhood will bear. The value of a larger sq ft home will not automatically be figured from the average price/sq ft of a smaller one. It's not a realistic expectation.

For instance, a 1600 sq ft home sold for 137,000. Someone wants to list a 2000 sq ft home, but the market does not support a listing of $171,000. It's more likely 150,000 or so because most of the homes are smaller. I think an appraisal would probably be less that THAT.

 

[eyor44]

We recently had our house appraised. Did the appraiser measure the house from the inside or outside? That makes a difference. and do you have any porches or garage that might have been elminated? I offered my appraiser our house plans, but she said she had to measure to be accurate.

My only issue with mine is she said our kitchen and bathrooms weren't updated. My house is 5 years old. How often are you suppose to update? I'm thinking she meant upgraded.

 

[emilymad]

They measured from the inside. Are they suppose to measure from the inside or the outside?

We figured out where they measured wrong so we have to have them adjust the square footage.

Our concern is that they used 5 sold comps and 2 current listings. There are about 8 listings in our neighborhood right now. One of those is almost identical to our house but they didn't use that listing. The main sold comp they are using to compare us to was sold a year ago. This is the lowest priced comp. They also included a comp that sold this past December which was the highest priced. To me this indicates that the market is improving to some extent but they still have us lower than the comp that sold a year ago.

We knew the appraisal was going to be low and not what we bought it for. We are fine with that and will still be able to refinance. Our issue is around escrowing our taxes and having to bring money to the table.

 

[sweetdana]

Listings do not count in vale, only to make sure it is in line with market. You can list your home for a million $, the selling price is what is important.

Also the price per sq foot is more for the smallest home in the neighborhood. The largest would be the least per sq foot. IE If the 3 beds were 1000 sq feet and the 4th was 1200 sq feet. There would be a difference but not 20%. They should be taking the largest other comp (not larger than yours), and using that for the cost per sq foot.

The larger the home, the less 200 sq feet makes. IE if you 1200 instead of 1000, it may make a diff of 8K- 10K, but if you are are 2000 instead of 1800, maybe only 5K-6K, and or 2800 instead of 2600, maybe 3K. Over 3K, it would make no real difference. Generic #s of coarse.

They also price into account what people are buying. IE if the market is supporting the smaller homes, with lower prices selling (which it is in most areas), or foreclosures selling. Having the largest home on the block, may not actually increase your value much at all. The market may not be allowing more $$ for larger homes right now. Sometimes having the smallest home in the bigger neighborhood, is better than the biggest home.

Working in the mortgage field for 8 yrs, there is very little change of getting a value appeal approved. You can try, or even try w/ another lender (unless you are doing FHA then same appraisal for a yr anyway), but chances are it would be very close to the same.

Good news, if the appras is less than your taxed assessed value there is a shot you can argue your taxes down. You have a legal doc stating the value of your home is X. Possibly saving you more.

 

[emilymad]

Listings do not count in vale, only to make sure it is in line with market. You can list your home for a million $, the selling price is what is important.

Also the price per sq foot is more for the smallest home in the neighborhood. The largest would be the least per sq foot. IE If the 3 beds were 1000 sq feet and the 4th was 1200 sq feet. There would be a difference but not 20%. They should be taking the largest other comp (not larger than yours), and using that for the cost per sq foot.

The larger the home, the less 200 sq feet makes. IE if you 1200 instead of 1000, it may make a diff of 8K- 10K, but if you are are 2000 instead of 1800, maybe only 5K-6K, and or 2800 instead of 2600, maybe 3K. Over 3K, it would make no real difference. Generic #s of coarse.

They also price into account what people are buying. IE if the market is supporting the smaller homes, with lower prices selling (which it is in most areas), or foreclosures selling. Having the largest home on the block, may not actually increase your value much at all. The market may not be allowing more $$ for larger homes right now. Sometimes having the smallest home in the bigger neighborhood, is better than the biggest home.

Working in the mortgage field for 8 yrs, there is very little change of getting a value appeal approved. You can try, or even try w/ another lender (unless you are doing FHA then same appraisal for a yr anyway), but chances are it would be very close to the same.

Good news, if the appras is less than your taxed assessed value there is a shot you can argue your taxes down. You have a legal doc stating the value of your home is X. Possibly saving you more.

Thanks! This was very helpful! While we realize it is a long shot to get things adjusted we have to try even if it is only increases it by a little amount. Right now we are looking at bring $10K to the closing table which isn't really feasible. For the listings they used as comps they did adjust the price down to reflect what homes in the area do actually sell for.

What happens in cases where there are no homes of comparable size to use as comps?

 

[Lucky St. Louis]

A couple things to note...

-A single family home should be measured from the outside. Condos are measured from inside.

-Do you have a two story foyer or family room? Make sure you are not double counting the square footage there...if you can't walk on it, it doesn't count.

-Only above grade areas are counted in square footage.

-Unfinished areas such as attics, closets or bonus rooms above a garage don't count. It must be liveable in order to count (drywalled).

-Enclosed patios or screened in porches don't count.

With regard to comps, the appraiser must select the best comps available in your area (preferably in your neighborhood). If nothing your size has sold, a smaller, comparable house may be used and the appraiser will make an adjustment for size. If a house is unique and there are no comps in the immediate area, an appraiser may go to a neighboring town (say if it's a 250 acre farm) but for residential homes, the mortgage companies want to see comps in the immediate area.

A year old comp really isn't the best one. While it is "legal" to use it, in this market, most mortgage companies want appraisers to use comps in the past 6months. He/she should have might have made a time adjustment for the date of the sale.

Appraisers get their information from a Multiple Listing Service (MLS). If a property wasn't listed with a Realtor and is sold as a "For Sale By Owner" it wouldn't be on the MLS and the appraiser wouldn't have known about it or used it. If the property was on the MLS, I would give the address to your lender and ask why it wasn't used.

Remember an appraisal is a subjective estimate of the value of your home. One appraiser may give more value to certain upgrades/features than another.

If you note that there are many errors on the report, please say something to your lender (better yet, e-mail the lender with all of your concerns point by point). They may have the appraiser correct the appraisal, have another appraiser review the appraisal for accuracy or order an entirely new appraisal. Red flags for me are the fact that a good comp wasn't used and the measurements were off.

I am not an appraiser but am in the real estate industry. There are some really great appraisers out there but there are also some awful ones! Don't be afraid to speak up.

 

[emilymad]

A couple things to note...

Thank you so much! This was so helpful! We have sent a list of items to our lender.

 

[muffyn]

A couple things to note...

-Do you have a two story foyer or family room? Make sure you are not double counting the square footage there...if you can't walk on it, it doesn't count.

-Only above grade areas are counted in square footage.

-Unfinished areas such as attics, closets or bonus rooms above a garage don't count. It must be liveable in order to count (drywalled).

.

our recent appraiser brought with him the tax record which had a floor plan. he planned on using THAT as his square footage plan. but for some reason it was wrong. we had a open overlook from the 2nd floor, that was shown twice as large as it actually was. the appraiser made sure his notes had the correct footage in.

( for a note, our house dimensions were measured from outside)

also our 3rd floor was drywalled/carpeted, (has a bed & pool table up there) but they would NOT count it. they said it was an attic . 800 square ft of living space & they said it was an attic

anyway OUR appraisal was MUCH higher than we thought we would get.

 

[emilymad]

We sent a detailed list of questions to the appraiser and have basically received no real response. Our main concern was the square footage issue. The appraiser refused to answer why the house was measured from the inside not the outside. We sent a copy of the appraisal we had done several years ago that listed a completely different square footage. We asked why some of the walls are completely measured wrong. Measurements are off by several feet in each direction when we measure ourselves. The only answer he has provided is he doesn't know why there is a difference and he will only use his number. He won't even come out again to double check. At this point we are considering disputing the charge through our credit card.