Real Property Appraisals/Below grade valuation


QUESTION: My home is a lake front property here in TN. Earlier this month I was required by HUD to have my property appraised for market value
in the process of applying for a reverse mortgage.
The house is 3500Sf with 3 levels on 1.5 acres with 200Ft of shoreline. However the bottom level is considered below grade because it is a walk out 'basement'. This level is basically a 1300 Sf house with bedrooms,kitchen fully outfitted with eating area, large family room (20x25) and full bath.
Even though it is finished exactly as the other 2 floors. He valued the first 2 floors at $193/SF but gave me just a value of
$4.45 for the BG area. Is this fair for market value comparison?


While the appraiser correctly valued the below grade area as a separate area, I can't believe that what you describe is only worth $4.45 PSF. First, you need two things:

1. A copy of the appraisal report, and
2. Download a copy of "Square Footage - Method for Calculating: ANSI Z765 -2003"

The ANSI Standards are one set of Standards for measuring a single-family home. If you read and understand these standards, you will probably know more about how to measure a home than most appraisers.

You need the copy of the appraisal because you need to find out how in the world the appraiser arrived at that number. He/she "should" have analyzed other comparables in your area that are reasonably comparable in terms of having 2 levels above grade and one level below grade, hopefully with a walk out basement. There are techniques to extract the value of an amenity such as a walk-out basement.

Once you get the copy of the report, take it to a real estate agent in your area. If you know the agent, you can buy them a cup of coffee, if you don't know them, you will need to compensate them for their time.

You need to ask the agent to look up each comparable the appraiser used in the MLS and make sure the appraiser correctly used the data. For instance, is one of the sales a Bank REO in bad condition? If you find mistakes, have the agent print out what are called "client copies" of the listings. You want to give these to the FHA Underwriter, not the mortgage lender you are working with so that they can forward them to the appraiser as evidence that he/she did not correctly value your home.

Next, have the agent do a search of your neighborhood area for comparables the appraiser missed, or did not use for some reason. Hopefully, these will support a higher value. Again, have the agent print out client copies to give to the lender to forward to the appraiser.

Unfortunately, even if you do all of this work, it may not result in a re-appraisal. Residential appraisers today are not being paid enough, or given enough time to prepare competent valuations.

Best of luck in getting a proper valuation of your home

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

---------- FOLLOW-UP ----------

I did not have enough room in the original space provided to explain the whole situation. The bottom line is that his 'market value' is based on a 2200/SF home instead of 3500/SF# Therefore his 'market value' is 1/3 off the total living space. The appraisal is $434,000 while the gross finished living is actually 3500/SF omitting 1300/SF# (1300x$197=$256,000). The ANSI and Fannie Mae guidelines provide for latitude provisions for equal value of the of the ABGL and BGL value. He then compared prices of 2000-2500/SF to determine 'market value'. Hardly an apples to apples comparison. I also have 2900/Sf of deck/concrete patio which he did not attach any value to.



The issues are too complex and too hard to follow. I will be in my office tomorrow 3/9 most of the day and some of the day Sunday 3/10.

Please call me at 909-861-6186 and I'll be happy to toss this around with you so we can solve this problem for you.  

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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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