Two Guaranteed Appraisal Killers - Overstating Square Footage; Including Expensive Personal Property In MLS/Contract


In September, I blogged about a Realtor who vastly overstated the value of his own home because he included the square footage of his huge, detached in-law unit in his total square footage estimate.

His main house/dwelling was only 2,300 square feet while his detached in-law was 1,400 square feet – for a total of 3,700 square feet. He told me he had a 3,700 square foot property and he was using similar-sized comparable sales to justify his value estimate.

Unfortunately though, our appraiser was restricted by appraisal guidelines from using larger comparable sales and had to instead focus on comparable sales that were closer to 2,300 square feet (the size of the main dwelling).

In any case, this illuminates an issue we see all too often.

Agents often lump all of the “habitable” square footage of an entire property together in the MLS, even when much of the square footage is detached from the main dwelling in the form of accessory dwelling units or detached in-law units.

This is particularly common when there is more than one house on a property.

We also often see it with unpermitted units or space, e.g. when a legal duplex has an extra illegal unit, or when a property has a finished basement that has not been permitted.

This is a reminder that appraisers usually have to employ comparable sales that have main dwellings that are similar in size to the subject property’s main dwelling.


Several years ago, I blogged about sellers offering Porsches with their properties as an enticement to get buyers to overpay.

And, as a sure sign that the high-end market is softening, I recently saw a seller attach a new Tesla to his property as an added enticement.

The problem is that mortgage lenders will only finance real estate, and not personal property.

When high-end personal property like cars, pianos or even very expensive stand-alone appliances are included in a purchase contract, lenders are effectively financing that personal property as part of the overall mortgage.

Appraisers will often not be able to support the contract price if the price includes expensive personal property as well, as they are not allowed to attribute value to personal property.

Even if there are no comments in regard to the personal property in the contract, comments in the MLS and a new Tesla in the garage of an otherwise empty house will be a huge red flag for the appraiser.

Hence, sellers should not attach high-end personal property to their homes, and if they do, they certainly should make sure there are no references to it in the MLS and/or purchase contracts.

And, if they still try to “sneak” some high-end personal property into their transaction, they should often expect appraisal issues.

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Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167

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