Posted by Jonathan J. Miller -Wednesday, December 22, 2010, 9:49 AM
Todd Huttunen began appraising more than 20 years ago with a few years off in between to pursue a career in cabinet making. He relegated that to hobby status and is currently an appraiser in an assessor’s office. His best friend dubbed him The Hall Monitor because of his rigidity and respect for rules. He offers Matrix readers tongue-in-groove insight on appraisal and housing issues. View his earlier handiwork on my first blog, Soapbox
At first glance, to the uninitiated, his insights appear to the far right of wonkiness but in reality they apply to all real estate professionals so read carefully my friends. I’m glad to have his contributions on Matrix.
The Adjustment for One Full Bath Versus Two
December 21, 2010
When valuing a residential property, an appraiser is faced with completing a form, most of which is already populated with a series of “canned comments” that do not change from one report to the next. Where the rubber meets the road is on the sales comparison grid – this is where adjustments are made to the comparable sales in order to arrive at a value estimate for the subject. Most every unit of comparison for which an appraiser makes an adjustment involves some degree of subjectivity. From a property’s location and size, to its curb appeal, to whether or not it has a fireplace or a pool or a finished basement – all these attributes will affect different people differently – save one.
There is one thing – and only one thing – in a house that is used by everyone, multiple times, every day for a variety of vitally important functions. Although we take it for granted, life as we know it would not be possible without the bathroom. The motivation for this article was to try to discover, once and for all, the value difference between a house with only one full bathroom versus one with two. And the reason for this is that when it comes to houses in my area (Westchester County) the market has spoken clearly and unambiguously. A three bedroom house with fewer than two full bathrooms near those bedrooms is considered functionally obsolete in this regard. Whether or not the functional obsolescence is “curable” in every case is an open question. In my opinion, more often than not, it isn’t. Thankfully, we have the grid to help us reconcile differences between the subject and the comparable sales. Unfortunately, in the appraisals I’m seeing, the adjustments most appraisers are making (usually $10,000 to $15,000 per full bath) between houses with one or one-and-a-half bathrooms and those with two or two-and-a-half bathrooms are wholly inadequate. In an effort to find out the appropriate adjustment for one versus two full bathrooms, I did what appraisers have been trained to do. I looked to the market for the answer.
More after the jump…
Posted by Jonathan J. Miller -Monday, April 13, 2009, 11:59 PM
It’s not reasonable for one person (me) to maintain 3 blogs and have a life, let alone 2 blogs and have a life or really a family of 6 (excluding the cats), 2 companies, a blog, 2 web sites and a podcast, so with the addition of my new podcast/blog The Housing Helix, I have decided to freeze my other appraisal blog Soapbox and provide appraisal content here on Matrix in addition to all the stuff you are used to seeing. Gasp.
If you are an appraiser, and only care about appraiser stuff, there will be plenty going forward if you bookmark this link.
As we say on Matrix and became apparent on my Soapbox endeavor: “Everything that has a beginning, must have an end.”
Let the fun begin (again).
Posted by Jonathan J. Miller -Tuesday, August 19, 2008, 4:38 PM
Six years ago we (me, my wife and sister) formed a commercial valuation firm Miller Cicero with long time industry veteran John Cicero, MAI.
People have always told me “the only good partner is a dead partner” but John proved them wrong…lucky for John.
He’s a great appraiser, smart, fun to be around and best of all, he’s got integrity (and if you have kept up with this blog, you’ll know thats in short supply in the mortgage business).
Miller Cicero has been guided with the same business philosophy as Miller Samuel has for nearly 22 years: think long term – neutrality – no short cuts.
It’s refreshing to see that there are clients out there that actually want to have an unbiased value estimate performed on a property. That’ll be the forward trend.
Here’s what John thinks.
Posted by Jonathan J. Miller -Monday, May 19, 2008, 2:14 PM
In this week’s The Hall Monitor post in our other blog Soapbox called Bigger Is Not Always Better explores the idea that the multiple decades long trend toward larger house sizes may be over.
In other words, smaller housing size may matter more in the near future.
Posted by Jonathan J. Miller -Sunday, March 2, 2008, 4:45 PM
Today on my other blog, Soapbox, I have a post called Appraiser Clearinghouse Concept Is Not A Clear Picture which is a followed to an earlier post on Matrix called [Talking Points] The National Appraisal Clearinghouse.
We seem to be arriving at the appraisal industry’s moment in the sun, courtesy of New York State Attorney General Cuomo, who has taken a follow the mortgage approach and actually approached this disconnect between value and risk in a relevant way. I suspect its going to pass us by quickly so let’s get something accomplished.
Prior efforts by others thought the solution to poor appraisal quality was to simply make it illegal to pressure appraisers. Good grief.
Posted by Jonathan J. Miller -Saturday, December 29, 2007, 11:04 PM
There has been a lot of great content presented by my guest columnists (and, ahem..me) on my other blog Soapbox as of late. Its a pleasure to have their contributions. Admittedly its appraiser-centric content, but isn’t that a big part of the credit crunch? Lack of understanding of mortgage risk and one way its measured is via value of the collateral.
Sounding Bored - My recent post outlines the problems with licensing the appraisal profession (hint: because it doesn’t go far enough) in Deja Vu: How Licensing Killed The Appraisal Industry As We Know It.
The Hall Monitor – Todd uses a tongue in cheek analysis of current appraisal practice and comes up with new rules for us to live by in Letâ€™s Get The PAP Out Of USPAP!.
Fee Simplistic – Marty dissects the credit crunch for us via Tin Pan Alley music in The Paper Moon in the Cardboard Sky; Bewitched, Bothered & Bewildered; Donâ€™t Know Why Thereâ€™s No Sun Up in the Sky-Stormy Weather: How Tin Pan Alley Can Better Explain the Credit Crunch Than Alan Greenspan
Palumbo on USPAP – Joe speaks to the labyrinth of appraisal guidelines that exist and the problems with loosening the reigns in USPAP 2008: Be Careful What You Wish For.
There will be a quiz on Tuesday…
Posted by Jonathan J. Miller -Tuesday, August 21, 2007, 6:10 AM
While we were resting by the pool this summer, dreaming of real estate of course, two of our Soapbox appraisal columnists were busy writing about valuation issues applicable to the Wall Street situation today. Their years of experience shows and its some of the best handiwork I have seen. Here are links to their recent efforts:
Fee Simplistic – Marty talks about the lack of underwriting that preceeded this mortgage crises and wonders if the same standards will be applied to underwriters as were appraisers during the S&L crises in: Move Over FIRREA-Make Way for FURREA: A Brief History of Real Estate Finance Follies
Straight From MacCrate – Jim talks about the problems with Wall Street valuation methodologies. Its one of the key issues with investors balking at subprime mortgages because they don’t understand the value of the collateral, and therefore the risks in: Wall Streetâ€™s Valuation Methodology â€“ Is It Correct?
Posted by Jonathan J. Miller -Sunday, July 29, 2007, 11:36 PM
In this week’s Straight From MacCrate post in our other blog Soapbox called Wall Streetâ€™s Valuation Methodology â€“ Is It Correct?, This week Jim MacCrate gets a bit DCFâ€™ed about how Wall Street does not fully explain how it values real estate. He believes its a looming problem.
Posted by Jonathan J. Miller -Saturday, July 14, 2007, 7:07 PM
In this week’s Straight From MacCrate post in our other blog Soapbox called Is The Stock Market Providing A Warning Sign To The Private Commercial Real Estate Market Or Is The Reverse True?, Jim applies the cart before the horse theory to the interplay between the stock market and the private commercial real estate market.
Posted by Jonathan J. Miller -Saturday, June 9, 2007, 8:45 PM
In this week’s Straight From MacCrate post in our other blog Soapbox called Sit Tight Or Roll The Dice And Buy More Real Estate? the dilemma of taking the red eye to Las Vegas or searching the real estate classifieds and risk another purchase is pondered.
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