Real Property Appraisals/Contributory Value


Hi John
Trying to get clarification on an appraisal I had received.
A comparable sale in to our own house sold for $1,360,000 and was 2100 sqft.  Our house is 2570 sqft.  The appraiser made an adjustment on the comparable of $8500 for a 470 sqft difference.
When queried he claimed the contributory value of the extra square footage in our house is $50/sqft for above ground and $25/sqft for basement. Both the comparable sale and our house have finished finished floor area comparable to the upper floors.  Am I wrong to think that the appraiser undervalued the sqft difference by accounting it at $8500? FYI the land value was $930,000.
Please advise & thanks:)


Do this math with me: The comparable sale you mention sold for $647.62 PSF. ($1,360,000 / 2100 SF = $647.62 PSF) OK, Included in this $647.62 PSF is the whole property: the residence, the garage, the site, the landscaping, pool/spa, and any other amenity.

If we hypothesize that a residence is the most important - read: contributes the most value to that $647.62 PSF, it it really reasonable that the residence contributes ONLY $50 PSF ???????

My question to the appraiser would have been: "OK, tell me Mr./ Ms. appraiser, if this comps house only contributed $50 PSF, what contributed the other $597.62 PSF ????????????????
($647.62 - $50.00 = $597.62)I'm assuming, of course, that this comp doesn't have 1000 acres of ocean front property that would mean that almost all of the $1.36 million is land value.

Now, let's do some more math. Let's assume for the moment that the appraiser's land value is correct at $930,000. We can subtract the land value from the sales price to get to one method of estimating the contributory value of the improvements.

So..... $1,360,000 - $930,000 = $430,000. Now: $430,000 / 2100 SF = $204.76 PSF. This $204.76 PSF again, is the contributory value and includes ALL IMPROVEMENTS. Now you can ask Mr./Ms. Appraiser: "If the house is only $50.00 of this $204.76 PSF, what in the heck contributes the other $154.76 SF. Does this house have 12 tennis courts, 16 pools and spas???

I think by now that we have impeached this appraisers conclusions from two different directions. There are a number of methods that are available in a competent appraisers "tool box" that allow analysis of the contributory value of any amenity. I'd have to give you an entire beginning course in appraisal methodology to present these analytic methodologies.  

I think what you have run into is the typical "fast and cheap" residential appraiser that lenders unfortunately hire these days. These appraisers have "pocket adjustments" that they were taught when they began, and use these adjustments in all market areas and all price levels. Residential appraisers are not being paid enough and are not being given enough time to produce competent appraisals. I am embarrassed by the way my profession has been affected by the new appraisal ordering paradigm.  

[sarcasm on] Gosh, Mr. Wilding, you don't really expect this appraiser to actually take the time to correctly abstract the contributory value of a house in your market area, do you?? [sarcasm off]

On this Forum, you can search "Bad appraisal" and "Bad appraiser" to read some of my other responses to people like you about the residential appraiser today.

My conclusion: Yes....from the data you presented, this appraiser did undervalue the contributory value of the residence of this comp. I wish I had somewhere I could send you to complain, but there isn't any one source. You can contact the Agency in your State that oversees appraiser licensing and file a complaint. However, if your State's Agency is anything like OREA in CA, not much can come from a complaint.

If you would like to ask any more questions, you can call me @ 909-861-6186, and I'll be happy to spend a few more minutes with you.

The only option you have is to go to another lender, pay for another appraisal and this time try to have a competent appraiser hired to appraise your home.

John C. Carlson
CA Certified General Real Estate Appraiser
Victorville and Diamond Bar CA  

Real Property Appraisals

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John C. Carlson


Any questions regarding commercial and/or residential appraising, appraisals or real estate valuation such as: appraising as a profession, valuation techniques, comparable sales selection & analysis, the new HVCC and how it affects appraisers & Borrowers. Also, questions like: "Why did my appraisal come in low & what can I do about it?" I cannot answer questions about comparable data in areas in which I do not practice. I have expertise in most areas of So. California.


31-years both commercial and residential valuation experience. State of CA Certified General Real Estate Appraiser, licensed to appraise all property types. FHA Approved. Specialized expertise with historic, architectural & luxury residential property valuation. Experienced in industrial building and small commercial property valuation. Experienced Reviewer of appraisal reports and expertise with intensive forensic reviews to uncover fraudulent appraisal reports. Expert Litigation and Expert Witness experience.

Associate Member of the Appraisal Institute. Associate Member of the Certified Fraud Examiners.

Numerous posts to Blogs. Please "Google" "John C. Carlson Real Estate Appraisals" where a list of responses I have made will show up.

Numerous classes by the Appraisal Institute since 1978 in the practice areas in which I specialize

Past/Present Clients
First Republic Bank Wells Fargo Bank California Bank & Trust Preferred Bank Numerous Attorneys.

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