There is a joke going around my appraisal office where we ask each other after viewing comparable sales, “Did we bracket the color?” This is funny to appraisers because bracketing has become a big issue in appraisal review.
Let me be upfront; I do support the concept of bracketing. I believe that if you cannot bracket a feature with something the same or similar (i.e. one that is better and one that is worse) on a comparable sale, then it is difficult to show convincingly that you have properly accounted for that feature in the appraisal. However, some residential lenders and appraisal management companies have taken bracketing so far that appraisers are waiting to be asked for an additional comparable sale to bracket the color of our subject property — thus, our in-office joke.
Today I pulled up to appraise a Portland, OR property and I could not believe what I saw; a camouflage-painted house complete with sexy silhouette accents. Fortunately, I was appraising a neighboring home. If I were appraising this home, bracketing the color might actually be a good idea (if it is possible) to determine what affect the color of this property has on its marketability.
The instinctive conclusion is that the typical buyer (or typical buyer’s wife) would be turned off by a home painted in this manner, and would require a discount to the price relative to the cost for repaint plus any financial incentive necessary for the buyer to make that repair. However, how do we know the typical buyer would be turned off if we don’t have any sales to support that? This market could have a strong segment of buyers that might be attracted to camo style paint and are willing to pay a premium for it (not likely, given the rule of conformity).
I once had an appraisal instructor tell a story about a house he appraised for the purpose of setting a list price. The house had been decorated in a kinky fashion. When he appraised the property, he estimated a reduction in price based on the perception that buyers would want to renovate. It turned out that the property was placed on the market, there was a bidding war, and the home sold for far more than the appraisal value estimate. These examples show why bracketing is important and should be at the heart of what appraisers do.
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