Home Buying in Milpitas>Question Details

praveenjayar…, Home Buyer in San Jose, CA

Appraisal values differ by 120K. Is it because of Towhouse vs. PUD

Asked by praveenjayaraman, San Jose, CA Tue Feb 26, 2013

Hello -

My first appraisal reported a property as a townhouse and came out at 635K. I ran a second appraisal and it came to 120K over the above price and exactly matched the offer price. The second appraisal reported the house as an attached PUD and somehow has a different sq ft area than the original one.

I want to ask how its possible for the area to be different and the prices to be so way apart. Is this a common thing around here ?

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Jennifer Strohfus’ answer
appraiser will be hired by your lender and they are usually conservative, so there are problems on this sellers market that buyers always offer higher price than appraiser value. Since bank only loan 80% with a 20% down payment, for example. It is the 80% of appraisal value, not offer price's 80%. Most of time, buyers want the appraisal value matches their offer price, so they can get enough down payment to purchase the property.
0 votes Thank Flag Link Tue Apr 30, 2013
Hi Praveen:

Thanks for your post. I won't comment on your appraisal because I, too, have run into some strange valuations lately. I will say, however, that attached housing has stymied appraisers for years.

But, I did want to clear up any continuing mistakes about homeowners associations and attached housing.

1. There is NO SUCH THING as a PUD. The phrase "PUD" or Planned Unit Housing is actually just another named for a planned community. It does NOT, however, tell you anything about the type of ownership for the home.

2. A townhome is NOT automatically a PUD. A townhome can be either a condominium or a PLANNED DEVELOPMENT (PD). A lot depends on whether the townhome is a discrete property with vertical walls that do not overlap other living units. A condominium's boundaries are described three-dimensionally, as a building "envelope" or "unit", and the planned development is a LOT and includes ownership of land as well as of the building on the land. Because the owner of a planned development lot has both the land and building as part of their ownership, a PD owner's property is considered more valuable.

The difference in value could be a correction to the type of ownership you actually have for this unit.

3. A "townhome" is a type of architecture, often called a "row house" in the East, and is characterized by being attached to another home. However, a townhome with air space that overlaps another unit (even if that overlap is minimal--one or two feet) will be a condominium rather than a planned development.

So it could be the difference between the condominium and the planned unit classification. However, to know for certain, talk with your mortgage agent or bank about the appraisals.

Good luck!
0 votes Thank Flag Link Tue Feb 26, 2013
This is a question you should ask the appraisr? There is something definitely wrong. Who is doing these appriaisals for you? Becky Strauss Broker ID 01202596, bastrauss@comcast.net, 408-718-2667
0 votes Thank Flag Link Tue Feb 26, 2013
Both of these are appraisal reports from different licensed appraisers.

Yes, it is strange that the 120K delta would be due to land value, but I am also puzzled that the sq footage changed. In the higher appraisal, the house about 83 sq ft more than the county records.

Is this again subjective to what the appraiser measures ? I can't imagine how a rectangular garage can have different measures.
0 votes Thank Flag Link Tue Feb 26, 2013
You've just come upon an example of why appraisers have been so widely vilified since the housing bust in 2007. The appraisal method is really just a set of guidelines for a subjective guess. Just like with real estate brokers, some are better at gauging the market and some have no clue. Either way, you can see wildly different figures.

Appraisers typically try to come up with a range that covers the offered price, so you'll very often see the appraisal come in at exactly the offer price. To complicate the situation further, a buyer's appraisal gives a very different value as a lender's appraisal. There's that much wiggle-room in the subjective appraisal guidelines.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Tue Feb 26, 2013
Praveenjayaraman:

First, it would really help to know the answer to Terri’s question: “Are these actually appraisals from licensed appraisers or opinions of values from other sources?” before tackling the valuation disparity.

If you have a true Appraisal from a Licensed Appraiser you can ask that an “Appraisal Review” be performed, but don’t waste your money unless you have identified a material fact that would change the property’s value.

So, since we do not have all the info at this point I’ll skip to some clarifications that may be of help to you.


A home is typically classified as a single family residence, condominium, cooperative, manufactured home, or PUD.

“Townhome” is really just a description of how a property looks and feels. Any of the formerly defined prop types can also be "attached" or "detached"... i.e. an "attached SFR", or a "detached condominium" aka "site condominium".

A "site condominium" can look like a house, but usually has a "zero lot line" (meaning your neighbor’s side of their home is the wall in your side/back yard delineating the property line.

To muddy the waters, many agents will list a Condo as a "Townhome" when it's really a "Townhome-style" Condo.

The primary difference between a PUD Townhome and a "Townhome-style" Condo is the PUD structure sits on land owned by the purchaser. However, while it's possible, I’m hesitant to accept the full $120K delta can be attributed to the dwelling’s land value -- and assuming you actually are looking at a true Appraisal(s).

-Steve
0 votes Thank Flag Link Tue Feb 26, 2013
Comparing a TOWNHOUSE to a PUD is like comparing an ORANGE to a TREE:
Townhouses are usually part of a PUD, and both have HOA's.
The HOA is key element.
The real comparison would be a CONDO to a TOWNHOUSE, where the Townhouse sits on the ground and will have a yard, patio and garage.

As far as the Appraisers are soncerned; it sounds like you got an appraiser who was schooled in the last few years, by Banks who were overly conservative, being very careful to protect the Bank's interests. Don't be angry; you'd want someone covering your deriere too.
0 votes Thank Flag Link Tue Feb 26, 2013
Appraisers are like agents. Some are good and some are bad.
0 votes Thank Flag Link Tue Feb 26, 2013
Are these actually appraisals from licensed appraisers or opinions of values from other sources?

Appraisals can vary, especially if the appraiser is not familiar with the area value and in today's crazy multiple offer market makes valuation very challenging.

Are you the seller or buyer? As for accepting the appraisal value it will be up to the lender and then whether or not you want the property.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Tue Feb 26, 2013
Also wanted to add, in the county records, the house is listed as a single family attached but other 'IDENTICAL' houses in the same community were listed and sold as townhouses.

Is it legit to accept the second appraisal which calls this property a PUD ?
0 votes Thank Flag Link Tue Feb 26, 2013
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