Lundquist Appraisal Company

Review: Ryan Lundquist's ego is greater than his knowledge. When he appraised my house there were 4 comparable properties in the neighborhood ranging from 379,000-799,000 and 31 in the last 12 months ranging 273,000-809,000. He only used a single comparison house to decide the value of my home, and disregarded the value of the other 4 comparisons he listed. The single home he choose was at the lowest end of comparisons, which was a foreclosure bought for 273,500 with cash (which substantially lowers the selling price). This foreclosure, which he didn't see any inside pictures of and physically didn't see inside of himself, was the house he said was the most similar to my house and was the only home used in determining the value of my house. This home is a tear down, literally. That is what the buyers did with their purchase, they tore it down!!! This unprofessional [redacted] didn't personally like the location of my house and therefore refused to use the comps he listed and when challenged refused to budge on the valuation at all. If you get him as an appraiser you better hope he would personally want to live there because he doesn't know how to be a professional.

Product_Or_Service: home appraisal

Account_Number: LACXXXXX

Desired Settlement: DesiredSettlementID: Other (requires explanation)

He should re-evaluate my house like a professional.

Business

Response:

Initial Business Response

First, I am sorry the owner is upset and the valuation did not work out as she hoped it would. I know that is frustrating. I do all I can to correctly interpret the market and make right decisions for those that hire me to do my job. In the following I will address certain points to hopefully illuminate some of my reasoning and where I am coming from as a professional. I hope the owner can consider my perspective.

PERSONAL: On a personal level, I'd like to clarify that the owner's perception of me as having a big ego, being unprofessional, judgmental and a [redacted] are very much foreign to who I am and how I do business. I understand if the owner is frustrated, but words like this do NOT in any way represent the way I conducted business relating to this property or the property owner. Moreover, the value had nothing to do with whether I would want to live in this property or not. There is no basis for making such an untrue claim.

LOCATION: It seemed the owner felt I didn't like the house or location, but this wasn't personal at all for me though. The truth is an aerial view of the property reveals it is located literally in front of railroad tracks, which makes it a less desirable location in the market for many buyers. Usually properties that are located on a busy street, next to a freeway or next to something like railroad tracks tend to sell for less. Moreover, the subject property has a very tiny lot size, which is definitely on the smaller side of what is typical in the market. Additionally, the subject street is not a street that has the highest values in the market. I am so sorry the owner feels I am disrespecting the property or location, but I am paid to analyze details like this, and I have to make honest adjustments based on data.

QUALITY: Secondly, the subject property has a very basic quality of construction for the neighborhood as it has entry-level elements throughout the interior and exterior. This is not in any way meant to diminish the home. It's simply important to realize the subject does not have high-quality upgrades by any stretch, but is rather plain in terms of craftsmanship. This is not meant to be offensive in any way, but only a description of what the house is and is not. This house was built close to 20 years ago and is located in the midst of a neighborhood where the vast majority of homes are classic with a higher quality of craftsmanship (and were built easily 70-90 years ago). Buyers in the market pay a premium for homes with a high degree of classic charm that are commonplace in a classic area.

HISTORICALLY LOW VALUE: When analyzing both recent sales of the subject in the past seven years (sales on MLS), each time it sold at the low end of the market price range when considering all competitively-sized sales between 1800-2300 sq ft. The subject property was literally one of the very lowest sales in the competitive market twice. These previous two sales help illustrate how the market has historically perceived the subject property as selling at the bottom (where fixers often are). This is not my opinion, but fact. Ultimately despite its larger size and newer age than many surrounding properties, it did not sell at a premium level in both of its recent sales, which also lends support for a value being reconciled toward the lower end of the market.

NOT a TEAR DOWN: The bottom end of the market also includes fixer properties and foreclosures, which is important for consideration and even more illustrative of where the subject property has historically been perceived along the market price spectrum. This is where the comparison of a "fixer" comp comes in to play. One property that the owner mentioned did sell in inferior condition, which I am well aware of and documented in the report also. However, this property also sold with a FAR superior location next to the park, which means the overall total package of this property with its inferior condition and superior location seemed to create a quasi-competitive price range for the lower end of the market (despite not being a perfect comparison obviously). Just because the property was a cash purchase or even a foreclosure does not mean it sold at a discount. Sometimes cash sales sell right on par with other sales. Actually, the Listing Agent thought the property sold for too much. This property was NOT a tear-down and has NOT been torn down either. It was purchased to be a rental from an owner who manages a construction company that specializes in finish work. This means the company was going to really polish this property up and probably do more than others would be able to do also. When the new owner began repairing a portion of an addition on this property though, it was discovered that there was a previous fire, which caused there to be extensive repairs needed. In fact, after the owner proceeded to start on repairs, things became way more extensive to the point where the city made the home owner get a new construction permit because of all they had to and decided to do. These repairs were NOT seen during the buying process or disclosed either during the purchase. It was discovered simply as repairs began. This could have lowered the purchase price obviously, but it was not part of the price because it was not known. In short, the buyer for this property did not intend to do an extensive renovation, but it ended up going that way because of circumstances and the nature of their business in fixing houses.

NO PERFECT COMPS: Unfortunately at times there are situations where there are no ideal comps. It would be nice to have three model match sales that were 20 yrs old, but that was not the case and will never be the case for a future sale or refinance. Some valuations end up looking a bit messier than others because there are no clear-cut comps. I wish that was not the case, but there was no way around it.

SALES FOR REVIEW: It is true that sales were provided for review, and I quickly responded to the review on the same date the "comps" were provided to me (the email was sent to my client - not the property owner since the owner is not my client). It is important to note each of these sales were not comps in my mind. A comparable sale or "comp" is one that is actually similar enough to be competitive to the subject property, which means a buyer would likely purchase the comp if it was on the market instead of the subject. Eight properties were provided to for review. Three of them were located on the other side of the freeway in a different part of town, two actually sold for less than the appraised value and three were not competitive due to a superior location and/or size. For context, one of the superior sales sold for nearly twice the value of the subject and it was very clearly unrealistic as a comparison. Two of the sales though sold at a fairly similar level once superior location and/or size were adjusted for. The owner called me an "unprofessional [redacted]" for refusing to budge when I reviewed these sales, but they were not comparable after I did review them.

WHAT "31 COMPS IN THE NEIGHBORHOOD" AND "4 LISTINGS" MEANS: The report listed four competitively-sized properties in one portion of the appraisal form where the form requests the number of comparable current listings as well as their prices. This is what the owner is referring to when the owner states there were comps between $379K to $799K. Having only four listings is a very limited sampling, so this should be taken with a grain of salt. Moreover, these houses may have had a similar size, which made them "comparable" enough to technically list on one line of a form, but were these properties competitive in appeal? Were they located on similar streets? Did any of these properties have a tiny lot size or back to the railroad tracks? Would the market view these properties as very similar to the subject property when considering all the above information? Ultimately there are certain spots in a valuation form that fill in raw data, but specific details for these "comps" are not adjusted for on that one line. This is why choosing actual competitive sales in the appraisal report and making adjustments is important so differences can actually be seen and understood in the report itself. I can see how the owner could read the number of listings and price levels and be left feeling very frustrated. I would honestly feel the same if I didn't understand that these "comps" were raw data rather than true perfect comparisons. Certain properties look comparable on paper when looking at raw data, but after doing more work and analysis, they end up not being comparable. The value ended up being reconciled to the lower end of the market for reasons mentioned above - not because I ignored something or didn't like the location.

Ultimately the value in February 2013 (date I provided report) did appear to be consistent with al