Just don't accept an offer contingent on appraisal... (that will lower your buyer pool, but frankly, I am not sure you have a whole lot of choice). There are some adjustments made for condition, but maybe not enough in your situation. You usually need 3-6 recent comps (last 6-12 months sales).

I think the closest an appraiser can come to comparing "like to like" is in a new tract home subdivision.

Time changes everything, even in that same tract home subdivision.

Appraisers use the most similar houses in the closest proximity within the experience period (usually the last 6 months here), & they adjust for differences such as condition, square footage, & improvements.

Improvements, such as pools/barns/tennis courts, hardly ever pay for themselves in increased re-sale value.

Condition will often get you a faster sale, but you may have to do some hard work on negotiations, as the buyer will want the nicer home for the lower price!

Unfortunately, if most sales have been foreclosures, that means that foreclosures *are* the market, & the appraiser has to use them, adjusting for condition.

Also unfortunately, you likely won't get much if any increased value from windows, paint, healthy lawn, etc, maybe a bit more from kitchen & bath re-model, depending on how long ago the work was done.

I wish you the best.

Foreclosures ARE your comps.

You take the closest comp you can find and then make adjustments based on condition, updates, etc.

It is one of the reasons that appraisals can vary from appraiser to appraiser.

Our appraiser acknowledged all the good things about our house, said clearly that if he used the cost of building method of appraisal it would be x (higher amount) and then gave us a low appraisal based on one sale in our subdivision where a builder sold very low after months on the market, and then used two homes from an admittedly worse subdivision; none of the homes was that similar to us. Appraisal was 16k less than asking. We have advised our DD who wants to sell and move to the lot we are holding for her to wait until there are 3 good comps in her neighborhood, not asks, solds.

IMO, the many appraisals/comps are wrong. Unfortunately, you are subjected to many incompetent people in the RE industry. They follow the status quo over, and over. They just take a few houses which they know nothing* about and make them comps. To me, some features in houses are more important than others. The bedrooms are standard. Kitchens, bathrooms, layout, the conditon of home is very important, but that's not how the RE industry views it.

To me, location is important in terms of travel time, and proximity to places that WE frequent on a daily basis, not because other houses in the neighborhood may be nicer, or worse. This is an individual thing. To keep it simple (and stupid, imo)the RE industry makes it one type of exterior/sq ft fits all, regardless of the uniqueness* of the house, and buyer's needs.

I have seen new construction, identical inside and out, so I can understand those being identically appraised, EXCEPT maybe for the location of the lot, and the sun exposure, blah, blah, blah...

If it were up to me, 2 homes next to eachother would not necessarily be comps. Here's why:
I would buy one and NOT even look at the other. That alone tells you they are not comps.

I had someone negotiating the purchase of my house saying that there are so many houses on the market... My statement was : Why don't you buy "those" houses? He realized where I was coming from. My house was loaded with extras, everything they wanted, prime location for their lifestyle, and in immaculate condition...

The house is worth what it's worth the the "normal" buyers. Unfortunately, the RE agents, appraisers set standards differently, and people buy into their simple evaluations. To me, no 2 houses are alike, unless they are cookie cutter with the same everything.

Thanks for the interesting responses and opinions. I certainly agree that a home with upgrades and special features 'ought' to have additional value, and probably will appeal more to a potential buyer, when choosing between homes for sale.

My concern is that a buyer's lender (bank or mortgage company) will hire an appraiser to ascertain value. The lender cares not how 'nice' the home may be, only that they can recoup their funds if necessary. The appraiser has most likely not seen the interior or condition of other recent sales they are using, rather using the sale statistics/RE listings, or perhaps a drive-by, to gather comps.

As mentioned, "adjustments for improvements" might or might not be a factor. I can see a buyer falling in love with this little cottage, and its many features... while their lender views only the business end and financial risks.

I guess it all comes down to the luck of the draw with the specific appraiser?????

"They follow the status quo over, and over. They just take a few houses which they know nothing* about and make them comps. To me, some features in houses are more important than others. "

You are not a lender trying to recover value after a default.

They are far more 'nuts and bolt' about appraisals than a purchaser for their own home.

They are looking for what they can get in a quick sale following a default.

Things that might be of particular value to YOU ad not to the a large portion of buyers are not of any interest.

Posted by brickeyee (My Page) on Sun, Jan 13, 13 at 12:25

"They follow the status quo over, and over. They just take a few houses which they know nothing* about and make them comps. To me, some features in houses are more important than others. "
You are not a lender trying to recover value after a default.

They are far more 'nuts and bolt' about appraisals than a purchaser for their own home.

They are looking for what they can get in a quick sale following a default.

Things that might be of particular value to YOU ad not to the a large portion of buyers are not of any interest.
*************************************************************

I'm not disagreeing with you. I'm not happy with how the "standard" came about-perceived nuts & bolts. Somebody set the standards how to appraise, and everybody follows, right or wrong....I always laugh and use the analogy of how Friday as a dress down day got experts. There was somebody who came out as an EXPERT in this. Unbelieveable how many SHEEPLE followed....

I know I cannot chnage the RE system, but it drives me nuts how quickly an ugly duckling, or the entry house on your street selling first becomes YOUR comparable. I want to scream telling people that the entry house was sold for 1/3 less by the original contractor, and it's not a true comp. Unfortunately, the RE peeps have an accepted by ALL "formula" to follow....

I bought and sold many homes, and I realize the stupidity of majority of the appraisals. However, I have to follow* the game, too.

For the OP,

I hope your appraiser will take many things into consideration, like how quickly others had to sell, and everything that the other houses had, and not just pluck a couple of houses out of his head. Your house in good condition should not be compared on another's foreclosure...

"Distressed" properties are not supposed to be used for comps, but are taken into consideration when there is little else to use. But that means only short sales or foreclosures. When it's an estate and the heirs sell low just because they want the money, that situation can hurt you.

The better comps will have similar bones to your home. Built within a few years of each other, about the same square footage, probably same original type of roof and siding and garage and yard, that sort of thing. The "upgrades" will have less effect than you think they will, unless, I suppose, the ENTIRE house and yard is like new. (Just my experience)
Maintenance will have less effect unless it's something obvious like leaky roof or moldy basement - and that means it will lower your house. It usually doesn't work to say, "well that house sold for $xxx and the roof was about to fall in!"

"Somebody set the standards how to appraise, and everybody follows, right or wrong"

Fannie, Freddie, & FHA set the basic rules for mortgages they will purchase, and these quickly become the 'standard' so that the secondary market can function.

From the OP
"When an appraiser comes up with comps, for a lender, are there statistics, other than actual recent sale amounts, to truly compare homes? For example, a house with original kitchen/bath vs one with remodeled rooms. Or quality replacement windows vs rotting wood single pane and aluminum storms. Or a large brick patio vs 10x10 cracked and weathered concrete. Or a green, trimmed lawn and nice landscaping vs a mostly dead weedy patch of vegetation. "

An appraiser should be making adjustments for all these things, but they are NOT going to be a fraction of the cost of the improvement.

"clearly that if he used the cost of building method of appraisal it would be x (higher amount) and then gave us a low appraisal based on one sale in our subdivision where a builder sold very low after months on the market,"

'Cost of building' is not normally used for single family houses.
What you spent to build has little to do with market value of the final product.

The builder sold a brand new house at a 'fire sale' price to get out from under it.
Regretfully that becomes a cop for the area.

Wiling seller, willing buyer.

Appraisers adjust for all sorts of things all the time.
It is part of the process to understand how to adjust for lot size difference, finished square footage differences, etc.

Many things done to 'upgrade' a house have little value except to the owner.

Plumbing is expected to work.
Electrical is expected to work.
HVAC is expected to work.
The roof should be waterproof.

Upgrades to basic functionality have almost zero value.

A new roof may result in a faster sale, but unless the old one was actually leaking it is of very limited value to a purchaser.

Brick,
I know all bout Fannie, Freddie, FHA.....
My point is that houses are NOT an exact science and shouldn't be treated as a such, because there are a lot of variables, except for identical cookie cutters.

Insurance companies use similar formulas (lol). I insured my house last year and the clerk, sitting in an office 10 states away, argued with me how much to insure my house for. I told him that I didn't think it was enough because to rebuild this house would be a lot more. He snipped at me that he insures houses in my state, town and even my neighborhood ALL the time...For a minute he had me thinking that the contractor made 500K on this house...

Anywhoo, they physically sent over a local guy and he told them that they UNDERINSURED my house....by a couple hundred thousand!!!
And THIS is my problem the "the committee" et al deciding the value of a house. I think a good rule is to try to rebuild it in the location your house is sitting, and see what it would cost(lot and house). Let's face it, depending where you live in the US(in my town all the good land is already taken. Lots are going in the 300K plus, and they are NOT choice. There is no land available).

I'm not sure if mention but an appraisal also includes market conditions - # of homes sold recently, # of homes in foreclosure and whether market conditions are improving, declining, or stable.

I think even if exact home sold 8 months ago at 200k in a declining market/conditions that comp will not hold the weight if it were improving conditions with multiple other sales.

"My point is that houses are NOT an exact science and shouldn't be treated as a such, because there are a lot of variables, except for identical cookie cutters. "

Every appraisal has a whole lot of lines for adjustments.

The appraiser just needs to give a decent rationale for th adjustments.

Sounds like you may have something 'overbuilt' being average.

Average cost manuals produce average rebuild costs.
They are based on square footage, but often still require adjustments for locality.

Keep in mind the old saw about 'What is a million dollar house in CA?'

A $150,000 house on a mountain top built to earthquake standards.

Unless you buy special insurance you will not get plaster walls and ceilings replaced.

The value of the land is immediately deducted from your cost when determining rebuild costs.
Land is not 'damaged' in a house fire.

If you insure for what the insurance company declares as 'replacement value' they are on the hook, despite other limits they may try to impose.

THEY set the value.
THEY wrote the contract.

That is why in anything approaching a total loss, call your attorney before the insurance company.
You are liable to need legal advice.

About every second year I get a letter from the mortgage holder saying "It appears you do not have enough insurance on the house."

My lot is at least 85% of the value, unlike their poor assumption of 20% lot, 80% house (even the county tax appraisal shows the high lot value).

My attorney wife calls them and talks them back into line every time.

This post was edited by brickeyee on Tue, Jan 15, 13 at 10:59