How Does an appraisal work, in the since of adjustments and area? How do they adjust beyond the highest sale?

Question

I have a house with Marble baths and kitchen, vaulted ceilings in living room including a custom oak stairway that leads to master bedroom (on second floor), custom oak cabinets, full 100% fin basement, 4bedrooms, 3 baths, and whole first floor (except kitchen/bath) has brand new maple hardwood flrs, new electrical-plumbing-drywall, EVERYTHING NEW except brick exterior. The highest sold for $300k but that house is minimumly rehabbed, cheap kit cab, white bath, plain like, while my house is top of the line.
Know the question is, How in the world is my house, with all those extras (maple hardwood, marble bath/kitchen, oak stairway, vaulted/cathedral ceilings in living room) that no other house in that area or within a mile or 1.5 mile radius has be compared and valued the same as the lessor house, the one sold for $300k? Why can't an appraiser adjust for those "extras"/go outside that area and say because of these extras, this house is worth $330-350 and lender excepts it????????

I have a house with Marble baths and kitchen, vaulted ceilings in living room including a custom oak stairway that leads to master bedroom (on second floor), custom oak cabinets, full 100% fin basement, 4bedrooms, 3 baths, and whole first floor (except kitchen/bath) has brand new maple hardwood flrs, new electrical-plumbing-drywall, EVERYTHING NEW except brick exterior. The highest sold for $300k but that house is minimumly rehabbed, cheap kit cab, white bath, plain like, while my house is top of the line and there is no other house in that area or within a mile or 1.5 mile radius that has those thing yet i am being compared and valued the same as the lessor house.
MY real question is how do appraisalers go above the highest sale in that neigherborhood. Like i have another house and the highest sale ever on the MLS was $239, then how did this other house sale for an unseen $257K. How did that appraiser adjust. The house was basiclly rehab but how did that increase take place???????

Answer 1

As an appraiser here is my two cents. First, the appraiser should be making adjustments for finished basements, bedrooms, square footage, # of baths etc. When an appraiser looks for comps they use sales that occurred in the same geographical area, similar square footage, style and market appeal. Also, it is difficult for an appraiser to find out what is the interior make up of each house such as type of cabinents, floors stairways etc. I definetly agree with you that your house should be worth more than other houses in your neighborhood however, it seems that your house might be over improved and you may have a harder time selling it than others in your area.

Answer 2

It sounds like your home is over improved for your neighborhood. The reason an appraiser can't go to another neighborhood is simple - because your house is not located in the other neighborhood. Remember location, location, location...You wouldn't build a custom home in a mobile park, same thing you shouldn't put superior upgrades in a neighborhood of entry level homes. In addition an appraiser just can't make adjustments for the superior items. Adjustments given in an appraisal report must be supported and extracted from other sales in YOUR neighborhood. If no other homes in your neighborhood have sold with similar features then there is no support to make the adjustments and you have experienced the laws of dimishing returns (too much of a good thing)