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July 12, 2008
appraisal values
I posted yesterday, at the end of a FSBO of my Park Slope apartment and the appraisal came in low and now buyers are demanding a huge price reduction. I just saw the appraisal report and the appraiser did not consider 2 fireplaces, outdoor space, and brand new appliances when assessing comps (and all comps were from other school zones too). How much does one generally allow for private, deeded outdoor space, fireplaces and new renovation (all new appliances), and washer/dryer in apartment?
Comments
We had one of our buildings come in at less than we thought once when we applied for a HELOC....explain to your bank contact that you think it's too low and why, provide some comps yourself, and ask that they send another appraiser....it could work.
Posted by: bricktop at July 12, 2008 2:58 PM
The appraisers are running scared because for so long they were overvaluing properties to please the real estate brokers. That's one of the reasons for the fix we are in with the mortgage crisis.
Posted by: guest at July 12, 2008 10:13 PM
I understand that, but it doesn't seem fair to greatly undervalue property either. This appraisal pulled 5 comparables, all of which were much smaller and none of which contained outdoor space, fireplaces, W/D in apartment, or new appliances. And most of the comps were in a different school zone (they were as many as 20 blocks away!) He did not adjust the prices for these amenities either.
Posted by: WTbound at July 13, 2008 7:50 AM
All this was answered in responses to your previous post. Simply tell the potential buyers that the appraisal is low for these very reasons. You are not lowering your price for a bad and inaccurate appraisal. They can go forward at the original price or they can move on. You will move on to the other bidders. Why are you caving if you know they are wrong?
Posted by: guest at July 13, 2008 10:41 AM
There is a value to us in just getting this deal done though (want to close sooner and they have already passed co-op board, etc.) You are right, we are moving on but I want to see if it is worth it to encourage original buyers to get another appraisal - if this appraisal was truly as out of bounds as it appears?
Posted by: WTbound at July 13, 2008 11:05 AM
Although she wasn't selling, a friend had an appraisal done for a re-fi. the first guy came and rushed through the building, literally stuck his hand into the apartments with the camera and took pictures without going in. Needless to say it was a lowball figure.
The homeowner and the mortgage company were both taken by surprise and the mortage company, on hearing how poorly the first appraiser acted, requested another which came in at a figure considered much more realistic. So it can happen. And basically an agreement is an agreement. If they try to stiff you now, you can't be sure they won't try to pull a fast one later on with something else. If they don't want to get another appraisal, then they really just want the low one to pressure you.
Posted by: bxgrl at July 13, 2008 11:21 AM
WT, if there is a value to you to not letting this walk, that value is how much you would be willing to negotiate the price so as not to lose the deal. On the law and on principle, there is no reason to lower the price, as many have commented on this and the earlier thread. It is simply a matter of negotiation. Do you know yet whether the buyers will walk away over this? I see no harm in taking the position 10:13 advised. If you are willing to negotiate, and if they threaten to walk, ask for a proposal. But know your bottom line before you negotiate. Is $5k the most you will take off before seeking another buyer? 10? Negotiate through your lawyer, if you need to. Sometimes buyers think they can push a FSBO around because there is no realtor to run interference.
Posted by: slopefarm at July 13, 2008 2:37 PM
I agree with slopefarm. The question for both you and the buyer is what is your walk-away price? You can say (via your lawyer) "we believe the appraisal came in low, but we'll take off 5K or 10K. Take it or leave it." Your buyer has time/money invested also, but it is also possible that the appraisal is now making them think they are overpaying. If I were you, I'd take something off the price and stand firm.
Posted by: guest at July 13, 2008 5:27 PM
Should have used a broker, they walk these appraisers through everything and would have provided enough comps to have it come in at its price. The appraisers even call the brokers if they dont think they are going to come in so the brokers can get them more comps etc.
I guess the 5%-6% you saved on the comission will be going to the buyers now.
Posted by: guest at July 13, 2008 7:02 PM
Should have used a broker, they walk these appraisers through everything and would have provided enough comps to have it come in at its price. The appraisers even call the brokers if they dont think they are going to come in so the brokers can get them more comps etc.
I guess the 5%-6% you saved on the comission will be going to the buyers now.
Posted by: guest at July 13, 2008 7:03 PM
I agree with guest @ 5:27. If you offer to take 5-10k off the price, the buyer will feel like they won and are getting a deal. It might be enough for them to proceed with the deal, and it won't really hurt your pockets too much.
Posted by: seahag21 at July 13, 2008 8:04 PM
Its so funny to read all of these idiotic posts.
Not one of you know what you are talking about.
Appliances are personal property and do not contribute to the value of real estate because they are easily removable. same goes for W/D
The appraiser did not necessarily come in " low ". I bet your estimate is too " high ".
Outdoor space , a fireplace is definitely nice to have, but they are each an amenity, and not a necessity. You need to match pair out comps to find out the contributory value that the outdoor space and the fireplace is worth. I bet no one here even knows how to start doing that, and I bet even further no one here can prove what a fireplace and an outdoor space is worth.
When you talk about school zone, where is the location? If it is not ps 321 or the other one i cobble hill, they are just another nyc public school.
BTW, brokers give appraisers comps that bracket the sales price, insuring a solid value that matces the contract price. they usually choose to ignore the model matches on the subject street that sell for 10% less than all of the comps the broker provided. so 8:04, your reasoning is potentially flawed.
also, cost does not necessarily translate into market value. a lot of the cost involved is personal taste, which is usually not Joe Buyer's taste.
Just consider this a free lesson from a NYS certified residential appraiser.
Posted by: guest at July 13, 2008 9:39 PM
Hold them to their bid. Ignore the brokers and fraidy cats who commented above. This is a bankers kid and they are working you. They won a bidding war and now want to bully you down. They wouldn't have bid so high and wouldn't have bothered to try to get you to negotiate if they didn't really want the place. Hold your ground.
Posted by: guest at July 14, 2008 12:06 AM
9:39 -
It is ps 321. And I am not just talking about appliances but a brand new (less than 1 yo) kitchen, was not even noted under the place on the form that said "new renovations/modernizations" Also, I realize valuing outdoor space is somewhat hard, but it must add value, right? How can you appraise a place with a huge outdoor space against smaller apartments with no outdoor space and make no allowances? Also, I suspect the comps were bogus, as every single comp had the same exact sq. footage and maint and all other profiles, yet they ranged from 3 unit bldgs to 36 unit bldg. I think the 36 unit bldg has an elevator, it must have a higher maintenance. Finally, on the appraisal form, the appraiser did not check off boxes of things, like W/D, fireplaces, that the apartment has. He even called it a condo when it is a co-op. As a certified appraiser, do you think these omissions/errors are important?
Posted by: WTbound at July 14, 2008 8:09 AM
8:09 am
lack of a decent mls system prevents appraisers from going through comps with a fine-toothed comb. they rely on local realtors, trulia ( which is extremely flawed and information, especially statistics has a HUGE variance upon interpretation) what the appraiser is doing is going by price per sqft, to be slightly unprecise. how is your kitchen that much better than any other renovated kitchens out there? appraisal values usually have a 5-10% variance and it is nearly impossible to break it all down like a scientist. yes , there is a value to be placed on outdoor space, depending if is private or shared, views. he probably had no way to look up the exact sqft of the comps. it can be argued that an adjustment needs to be made. but what is that adjustment? it is also not dollar for dollar , but a percentage adjustment as that difference holds the same not matter where prices have been or are headed.
he/she could also suck as an appraiser. i have encountered many horrible appraisers out there. alot of them are in the grey-collar realm and are rough around the edges, but usually good peeps. appraisers are also trained by some shit appraisers. appraisers are usually abused by their superiors and are on the road in shit neighborhoods all time, taking their lives into their own hands on a daily basis to make someone else rich ( who is a monday morning quarterback as well )
but believe it or not, it is a pretty cool job. work from home and the road, see different towns most people never see,
Posted by: guest at July 14, 2008 10:01 AM
In 2005 my fireplaces were appraised at 7.5K a piece and out door space at 10K. Had no idea they were worth that much.
Posted by: DeLepp at July 14, 2008 12:30 PM
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