A Costly Mistake

Yesterday I made a common mistake that appraisers make by not getting all the information before the appraisal.  The broker called me to see if the value the homeowner needed was in range of the value of the property.  Without seeing the property but looking at public records and MLS data, I knew that it would fall in the $430,000 to $480,000 range, which was where the client needed to be to refinance.  Perfect, right? This client of the brokers is a “special client”, someone famous.  That is one of the perks of living and working in Southern California.  So, I had to deal with the client’s C.P.A., someone who was not familiar with the property.  I set up the appointment with the C.P.A., arranged payment, and went to view the property.  I shot my comps prior to viewing the property and everything seemed perfect.  All comps were sold within 3 months prior to the report date, were within .5 mile of the subject property, were within 20% of the size of the property and the land and they were all built within the last five years.  When I got to the subject property, I shot the pictures, measured and went to say thank you to the mother of the homeowner (mother of famous guy).    She then told me that the situs was incorrect and that the extra bedroom downstairs was converted by the builder from a three car garage to a bedroom, adding about 220 square feet of living space and eliminating one of the three garages.  I was stuck out in the field, with comps that were mostly smaller than the subject (it was already large for the area).  Luckily I called my dad, another appraiser, who happened to be in his office and he found me a few more comps that were larger and would work better as comparables for my appraisal.  In this situation, I was lucky because the value need was in range with the smaller comparables.  However, if it had been the other way around, I would have been in big trouble with my client.  Lesson #1, confirm public records data prior to viewing the subject property.  I’ve been appraising three years and have made the mistake only a few times.  However, it is a costly mistake that can lose the deal for an appraiser and the client.