Since it's a lazy Friday afternoon, I decided to investigate why my appraisal of Rental #1 came back lower than one made less than 1 year ago. So I started looking over the two side by side and doing a point by point comparison. Here are the major highlights of what I found. NA refers to the new, lower appraisal I had done. OA refers to the original appraisal done in September, 2006.
NA: sell time 3-6 months
OA: sell time less than 3 months
NA: No driveway
NA: 1 fireplace
OA: no fireplace
NA: no patio
OA: patio / deck cover
NA: cyclone fence
OA: no fence
NA: Carpet needs to be replaced in near future
OA: No repairs needed
NA: 7 rooms, 3 bedrooms, 2 baths, 1,585 square feet
OA: 8 rooms, 3 bedrooms, 2 baths, 1,640 square feet
NA: 3 comps currently for sale from $74K to $79K
OA: 2 comps currently for sale from $77K to $88K
NA: 5 comps sold in prior 12 months from $47K to $79K
OA: 5 comps sold in prior 12 months from $75K to $90K
NA: Comps had inferior heat, air, superior car storage
OA: All comps truly comparable
Cost approach to value:
OA: Replacement Cost New
NA: Site value $10K
OA: Site value $15K
The new appraisal rates the property at $62 per square foot. Since it also says the square footage is 55 square feet less than the original appraisal, this translates to a $3,410 drop in value. That alone accounts for one-third of the valuation difference!
So it's obvious appraisals are very subject to human error. I mean how hard is it to determine if a property has a fireplace or a driveway? Or to count the number of rooms in a house? And yet the two appraisers looking at this property differed on such seemingly cut and dried items as these. Now I will grant that comps sales have been lower, the market slower, and it is possible the tenants have destroyed the carpet in the 7+ months they've been there. However, I think the other errors can easily account for at least 50% of the difference between the two appraised values.
And yes, I did check to make sure they were actually appraising the same house :-) Pictures were included and all the other identifying details match. I am curious to see what the tax records state the square footage of the house is. I don't believe Oklahoma has that information available on-line, and I don't have the paperwork to look it up with me right now.