What constitues a bedroom in Atlanta Ga. continued?

Asked by Aubry Wooten, Atlanta, GA Sun Oct 17, 2010

All, I certainly appreiciate all the responses. The appraiser would not talk to the seller. The bedroom, in addition to having a regulation window, private entrance etc., has a dedicated HVAC. Three bedrooms vs. four certainly affected the value (on paper) and actually reduced the value after $90,000 of renovations. May 2009, the house appraised for $462,000. After the renovations, (two bedrooms upstairs combined for a beautiful master bed and bath, hall bathroom updated, basement finished to include large bedroom, family room, exersize room and storage. With all these upgrades, the house appraised for only $398,000 one year later. The house is located in Breckenridge with house values between 500K to 900k. Is this a judment call on behalf of the appraiser not to include the 4th bedroom there by driving down the value of the home?

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Jeff Payne, Agent, Atlanta, GA
Mon Oct 18, 2010
Hi Aubry,
An appraiser MUST have experience in YOUR specific neighborhood. I work Atlanta's in-town neighborhoods and have seen deals and refi's get derailed when appraisers who work mostly OTP are used. You might try a different lender and thus a different appraiser (hopefully one familiar with your area) but that doesnt guarantee you'll get a number that will work. That being said, even with the improvements you mentioned, in these times, some properties just arn't worth what one might think.
Best of luck to you.
1 vote
Dean, Other Pro, Knoxville, TN
Sun Oct 17, 2010
A basement is not automatically valued at less than the above grade level. I'm not sure where that rumor stated, but its not true. It can be true, and often is, but not always.
Its down to the basement finish, the level of access, the layout, and most importantly, how the market defines it.
Second, if there is a finished room in a basement, but you can only access it by walking through an unfinished section, typically it can not be counted. I know that's not the case here, I'm just throwing that out there.
Third, and most important. The appraisal on page one of the URAR asks for ABOVE GRADE room count and square footage only. Many people see the rooms listed here and the square footage and assume that the appraiser has missed something. That's just the way the typical URAR is set out.
Even on the second page where the comps are listed, the room count is for above grade rooms only. Below is the section to place any below grade rooms.
Basement bedrooms OF COURSE are considered in any appraisal, as long as they meet certain criteria.

Appraisers still are, and always have, given value, if the market dictates value is warranted to basement bedrooms.

Lastly, as is true in any profession, there are some bad appraisers out there, just as there are bad agents. However, if you are not truly familiar with how an appraiser works, how their job is defined, the guidelines they have to follow, and the true market conditions, it is easy to assume that they have done a bad job. Appraising is not putting 3 comps on a grid to get a value.
As for the HVCC, well the HVCC is no more and has been replaced by a Fannie Mae directive. We can and always have been allowed to talk to Realtors as long as value is not the topic. As to the person that suggested that appraisers have no reason to go good work now that we are “insulated from the lender” (which isn't true), that's just simply not the case.
1 vote
Morgan Hill,…, , Sandy Springs, GA
Sun Oct 17, 2010
I feel your pain... I had the same appraiser torpedo two of my deals in less than two weeks. I was livid and after his throat. Fortunately he called the second torpedo a mistake and increased the value enough to make the deal... My point is, appraisers are just people. They make mistakes and have opinions just like every one else and now that the law insulates them from their employer (the lender) they have no reason to do good work. Of course, that's just my opinion.
Web Reference:  http://www.morgansteam.com/
1 vote
Leigh Hays, Agent, Altanta, GA
Sun Oct 17, 2010
I did have an appraiser who did not specifically include a bedroom in his bedroom count of the report but it was included in the square footage. Our appraisal was fine in this instance but when talking with the appraiser - we were told 3 vs. 4 bedrooms would not have made as much of a difference - it was the sq.ft. that was important. This was a foreclosure in an intown neighborhood.

Appraisers are allowed to use their judgement. Using an appraisal company who KNOWS the specific neighborhood is very valuable. You might consider a second apprasial. And the change in the appraised price is not surprising in the recent market or with the changes in the Appraisal guidelines which changed Summer time 2009. It could be that the May 2009 appraisal was using comparables that were older and not very reflective of the market at that time. If your data from that appraisal was 4 to 6 months older it definitely can make the most recent appraisal feel like it was a dramatic difference.

AND sadly renovations do not always improve the value. They can decrease the value and definitely we have not seen renovation money recouped in our market of the past 2 years.
Web Reference:  http://www.leighhays.com
1 vote
Hank Miller, Agent, Alpharetta, GA
Fri Oct 22, 2010
An appraiser MUST have experience in a neighborhood? Must? Really? And an agent can't work Sandy Springs and Roswell? Jeff - you can't do work OTP? Do the rules change? Last I checked, the guidelines for what constitute above grade/below grade areas were the same ITP and OTP. Come to think of it, so are the rules regulating other parts of the appraisal process.

Appraised value is based upon CLOSED sales and analysis of the area. Competent appraisers have multiple resouces for finding CLOSED sales - MLS/FMLS/Redlink/Tax Records - in any area. The closed sales and the data derived for the 1004MC will set value parameters.

Now toss in pictures - yes those are required along with pix of any functional and external issues, deferred maintenance or other value/marketing influences. Toss in as well that during the underwriting process the URARs are reviewed and statistical models are used to develop parameters for the area independent of the appraisal.

So what does "know the area" mean? Is it "make the number" - haven't appraisers been drawn and quartered for "making the number"? Here's a novel idea - how about agents stop BS'ing folks about what their property might be worth. How about agents learn what appraisers do, how they look at homes, how they derive value and what's involved trying to anticipate the stupidity of the underwriting process. How about agents actually comp listings like an appraiser so they can head off issues? "Kill the deal" is as stupid a saying as there is.

I'm both a certified appraiser and broker, I see it from both sides. I routinely speak with agents and owners about assignments, I ask for their input and always ensure I hit all the bases. That said, any report I do stands on the data - of course it's subjective but at the end of the day it has to be reasonable and supported by current data. Appraisers are not in the witness protection program and this isn't rocket science!

The market dictates value - that home is worth what someone is willing to pay. We don't know that number until it's listed so in the meantime it's appraised. An appraisal can change based upon the comps - an appraisal is a supported value at a single point in time - the next day it could change. It's not a guarantee of anything. http://www.hrmiller.com/estimating-value.asp

Aubry - if you want to shoot me an email with the report I'll look at it and see if there are errors, I've done that many times before.

Let's ease up on the drama with ITP/OTP and all the other nonsense -
0 votes
Aubry Wooten, Home Buyer, Atlanta, GA
Sun Oct 17, 2010
In response to Ms McCarty's answer, the 2009 appraisal was for a refi with cash out to renovate the home. After doing some research, it's more important than ever to ask the appraiser what % of his appraisals are performed in or around your neighborhood. It's evident; the appraiser needs to be very familiar with your community. I'm finding out that this is not an exact science and is an arbitrary process. To the appraiser, its business and just another appraisal; but, for the seller/home owner, it's personal. It's taking advantage of these low rates...the difference between a 30 yr. mortgage vs. a 15, retiring a little earlier vs. a little later. What seems to be lacking in the appraisal process is a little common sense.
0 votes
Stephanie Mc…, Agent, Canton, GA
Sun Oct 17, 2010
Certified appraisals are subjective. The appraiser is following a set of guidelines but selects the properties that recently sold in the area that he feels are most appropriate for the evaluation of the subject property. The purpose of the appraisal is to prove value to the lender - the lender wants to know how much they could expect to sell the property for if they had to take the property back. With prices fluctuating as wildly as they have been in most areas, this is not an easy task but I doubt that any appraiser is out there to intentionally drive prices down - too many factors make that an unlikely scenario. Not counting the basement room as a bedroom for appraisal purposes doesn't mean it was given no consideration at all. May 2009 appraisal was probably for HELOC or construction loan - not at all comparable to an appraisal for fair market value.
0 votes
Michael Hamm…, Agent, Suwanee, GA
Sun Oct 17, 2010
The combined wisdom of Trulia voices has convinced me that for appraisal purposes as related to a mortgage, any "bedrooms" below grade do not count in the report as a bedroom, regardless of door, window, HVAC or interior decorating circumstances. Will hang up, however, and listen...

Michael Hammond

0 votes
davidwbrower, , Woodstock, GA
Sun Oct 17, 2010
Where was the bedroom located? If it's a bedroom it's a bedroom. Not a lot of room for judgement. There are some good appraisers on here answering questions so i look forward to hearing what they have to say.
0 votes
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