I am refinancing my investment property and the appraisal just came back. It appraised lower than I anticipated and I noticed that the lower-priced comps that were used were two-bedroom homes, while mine is a 3BR.
All of the properties were in the same general neighborhood and in very similar condition (newly remodeled).
My property: 1122 SqFt, 3BR, 2 baths, appraised at $284,000
Comp 1: 1060 SqFt, 3BR, 2BA sold at $309,000 (no +/- price adjustments were noted, this appears to be an excellent comp for my house)
Comp 2: 1027 SqFt, 2BR, 2 BA sold at $250,000 (price adjusted up to $259,800 due to size of lot)
Comp 3: 1449 SqFt, 3BR, 2BA sold at $319,000 (price adjusted down to $288,300 for square footage)
Comp 4: 1039 SqFt, 2BR, 2BA sold at $265,000 (price adjusted up to $273,141 for square footage)
Comp 5: 1260 SqFt, 3BR, 2BA sold at $320,000 (price adjusted to $316,815 due to smaller lot size and larger square footage)
The appraiser also has a list of notations regarding potential adjustments that appears to be a standard list copied on every report. This note appears there:
“The subject market typically prefers properties with three to four bedrooms. Minimal differences were noted between properties with three, four, or more bedrooms. Some market participants prefer fewer, larger bedroom suites, while others prefer more, smaller bedrooms. No measurable market recognition was identified for this differential, and no bedroom adjustments were applied.”
My property is in an older neighborhood where 2-bedroom homes are not unusual, but outside this little neighborhood it would be rare to find a 2BR single family house in my area. The notation above gives me the impression that this appraiser’s SOP is to not adjust for number of bedrooms when comparing homes with 3, 4, or 5 bedrooms, and that the appraiser didn’t think to change this procedure when comparing 3BRs to 2BRs, which in my opinion is completely different.
I know appraisers will rarely change their report but I wonder if this is worth asking the bank for a different appraisal.