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2010-09-15 21:08:03

“Relevant Characteristics”—or, How Could the Appraiser Miss That?!”

          I got a call today from a former student, great REALTOR® and good friend. She was frustrated beyond belief; a pending sale of a lake front property had just been torpedoed by an appraiser. The lake in question is Lake Wallenpaupach, in the Poconos. The property has what is called “technical lake frontage”; PPL owns the lake and the frontage, but as is true in any lake community, the properties abutting the lake are worth more than the properties within the community who do not enjoy frontage, or the unimpeded views. Water frontage always impacts value; this can even been seen in seasonal rentals along the ocean, lakes, bay, river or creeks; those properties with frontage will enjoy a higher rental value and a higher sales price.

          But, back to my friend’s situation: the appraiser used as comparables properties which did not front on the lake, but were located in the lake community. I asked: “Are there recent comparables available with lake frontage?” She said, “Yes, and like the subject, they are being bought, torn down and replaced.” She said the appraiser had made a $30,000 site adjustment for lake frontage. I asked her: “What would be the value of the site, as if vacant and unimproved?” She said: “$300,000.”

          Here’s where it gets really ugly: she and the buyer both provided additional information to the appraiser, who said he “hadn’t found those lake front comps”. Despite that, he won’t budge on the value; he won’t consider looking at the comps the agent found;  and the lender isn’t pushing him.  She asked: “What else can I do? The appraiser says he can’t and won’t talk to me.” I sighed (you can hear that from here!) and said: “Yes, he’s right; you aren’t his client; neither is the buyer; his client is the lender.” I then advised that she have the buyer tell the lender: “I think your appraiser missed a major relevant characteristic of this property: it has lake frontage.” The phrase “relevant characteristic” is special, and should be powerful to both the lender and the appraiser; USPAP the Uniform Standards of Appraisal Practice, which is embedded in all state appraiser license laws, requires that appraisers identify all relevant characteristics of the subject property in the development of an appraisal. This includes knowing what they are, and making an appropriate adjustment. My final question to my friend was: “You are active in that market; can you tell me (or anyone else) what the value of lake frontage is?” She said: “Absolutely!” So here’s the point: if she can quantify that, the appraiser should also be able to recognize it and quantify it.

          Where will this end up? It’s ugly enough already—we have an intransigent appraiser who, having taken a position which sounds wrong, refuses to reconsider or change his mind; we have a lender who seems to not care that the appraisal received missed major relevant characteristics of the property; we have a buyer who can maybe try another lender, but might lose the property; and we have an agent who may or may not lose this sale, but has surely lost respect for someone who should be another professional. This isn’t the way it is supposed to work!

Melanie McLane’s website is: and she can be reached at Her course, “Dollars and Sense” explores these concepts.

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