More often then not home values are based on sales of similar homes with similar square footage often referred to as GLA. This week as I was working on a BPO I came to understand how GLA can in some instances become the elephant in the neighborhood and that what you see is not always what you get when doing drive by inspections. Not that I didn’t know there could be flaws but I gained clarity in what is and what might not be when it comes to doing drive by inspections.
I am not an appraiser but for the last 10 years I have supplemented my income by providing opinions of value based on market information and I consider myself to be fairly good at determining what a particular property is worth based on market information. Over the last several years I have run across homes that were constructed of pieces and parts of used building materials while the outward appearance presents itself as normal. These instances have amounted to substantial losses for lenders and those costs are generally passed on to consumers.
What I have found in some instances on interior inspections is far from normal and most troubling is a recent find where builders appear to be constructing for GLA aka more space that could in fact game the system of appraisal as it has been in practice where square footage is how value is assessed instead of the practicle application or usability of the space. This has forever changed my perspective and made me more suspicious of larger than usual homes that don’t seem to sell and been an eye opener in the process.
In the past I would often suggest that interior inspections are recommended when completing a drive by inspection. In the future I will strongly encourage interior inspections, especially since I now know that the oversized property in a great location can be the elephant in the neighborhood and could be more about adding GLA to an appraisal rather than actually providing usable living space that buyers are looking for in a troubled market. Copyright©2011 Sandra Bundy, Broker-in-Charge, B&P, Inc. This work may not be copied or reproduced in any manner without the express written consent of the Author.
