Custom Residential Architects Network

Is there any empirical data showing that architect designed homes have a higher resale value than non-architect designed homes?  I'm looking for scientific proof, that hiring an architect to design a home is financially the right decision for a potential client to make.  I'm sure this kind of thing has been compiled before, but I'm not finding it anywhere.  Does anyone know where data like this may be recorded?  Important: I'm talking about scientifically collected data with references, that is well documented and understandable, not opinions, or anecdotes. 


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Michael Gustavson
Intern
Madison WI
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You might want to quiz Eric Rawlings, a frequent contributor to this forum.  He has made this point many times.  Perhaps he could put together a spreadsheet for you, as compared with non-architect designed homes in his region and create some charts that provide something visually confirming of this premise, which I believe is true.

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Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
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The only way to gauge how Architect designed homes are selling compared to "the others" is to analyze sales. All commodities and products are valued by the amount someone is willing to pay for them. This concept has been around for thousands of years and will not change. We cannot, as designers, determine the criteria for which our products are deemed valuable. Just because an Architect designed a house or because it has a green certification does not automatically give it value. You can design the most energy efficient home and place your stamp on it, but if it looks like a 3rd grade science project or if you have to go through the garage to get to the dining room from the kitchen, people will not likely find it valuable to them. It's all about the sales.

If you don't design speculative houses, you don't know what your work is worth to the public as a NEW item on the market. Only a spec house is considered NEW. When your beautiful house designed for the end user sells, even two months after they occupy it, it will be compared to USED houses in your area and given a USED house value. This is just like driving a new car off the lot. The problem with tracking the sales of Architect designed houses is that we're not normally designing the NEW spec houses that establish the highest value per sf in the area where we practice. When we send our clients to the bank with a NEW end user house project, the bank's appraiser is looking for sales in the area of NEW houses, or SPEC HOUSES. Our best work for the end user client is valued by the job spec house builders are doing, so it should behoove you to raise the design bar in your area by getting in the game.

I design at least 10 unique spec houses a year. I started as a bottom feeder, so much of residential experience comes from designing renovations to old, in--town houses that would be sold at spec. Eventually, I would design new spec houses as well. Over the years I made mistakes and had successes and I could see how the market place reacted to my houses. I do a lot of work with a builder who sells her houses for top dollar. We have an 8-9 year history of selling the houses that demanded the most money in the area. Our house sales would be used by every builder in the area as the top comp on their appraisals and they would be able to justify a higher price for their work because the appraiser simple averages the most recent sales in the area. I single handedly drove the property values up in my area because I was competing with mass production artists with a business model to undercut each other with cheap buildings. Because of my sales history, real estate agents began telling other spec builders about me and I explained to them that a massed produced design creates no urgency in a buyer. They can pick up a copy any time. A unique spec house does create a sense of urgency in a buyer. My sales history of spec houses has created a higher value for my work in their mind. Unfortunately, the appraisal system has no way of recognizing my value as a designer because it's all about what my community of competitors are doing in my area.

I'm not the most talented Architect in this group, but I have watched how my product is compared to the others in my market and I'm over here shooting fish in a barrel. I'm convinced if the rest of us spent more time designing spec houses, everyone else would see similar results. Until that happens we will never convince appraisers, bankers, or clients that our work is more valuable because the cheapest made houses using the same floor plan will always be valued at the highest amount just because they enter the market as a NEW item and our beautiful houses always look over priced and not worth the expense because they typically sell as USED item at a lesser rate.

I've been asked to speak about this subject at the Reinvention Symposium in Chicago on the 19th of Oct. If you would like to hear more and can afford the trip, please join us. I hear they're setting up a dunking booth for those of you I've offended, so there's something for everyone!!!

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Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
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Eric,
Thank you for your response.  It seems that it is very difficult to get proof of the value of architecture services by comparing new construction to old construction.  Your method of determining the architects value by doing spec. homes seems to work as a sort of proof, because you are comparing new homes to new homes.  I was thinking another type of "historical" proof could come by comparing old sales of non-architect designed homes to old sales of architect designed homes.  This way the comparison is not old sale to new sale but old sale to old sale.  I wonder if some realtor organization would have this kind of historical data? If not, it definitely helps to have the story you have told about spec homes in my back pocket to try and help explain the value of hiring an architect.

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Michael Gustavson
Intern
Madison WI
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Original Message:
Sent: 08-06-2012 09:44
From: Eric Rawlings
Subject: Scientific Proof that Residential Architects Are Worth It?

The only way to gauge how Architect designed homes are selling compared to "the others" is to analyze sales. All commodities and products are valued by the amount someone is willing to pay for them. This concept has been around for thousands of years and will not change. We cannot, as designers, determine the criteria for which our products are deemed valuable. Just because an Architect designed a house or because it has a green certification does not automatically give it value. You can design the most energy efficient home and place your stamp on it, but if it looks like a 3rd grade science project or if you have to go through the garage to get to the dining room from the kitchen, people will not likely find it valuable to them. It's all about the sales.

If you don't design speculative houses, you don't know what your work is worth to the public as a NEW item on the market. Only a spec house is considered NEW. When your beautiful house designed for the end user sells, even two months after they occupy it, it will be compared to USED houses in your area and given a USED house value. This is just like driving a new car off the lot. The problem with tracking the sales of Architect designed houses is that we're not normally designing the NEW spec houses that establish the highest value per sf in the area where we practice. When we send our clients to the bank with a NEW end user house project, the bank's appraiser is looking for sales in the area of NEW houses, or SPEC HOUSES. Our best work for the end user client is valued by the job spec house builders are doing, so it should behoove you to raise the design bar in your area by getting in the game.

I design at least 10 unique spec houses a year. I started as a bottom feeder, so much of residential experience comes from designing renovations to old, in--town houses that would be sold at spec. Eventually, I would design new spec houses as well. Over the years I made mistakes and had successes and I could see how the market place reacted to my houses. I do a lot of work with a builder who sells her houses for top dollar. We have an 8-9 year history of selling the houses that demanded the most money in the area. Our house sales would be used by every builder in the area as the top comp on their appraisals and they would be able to justify a higher price for their work because the appraiser simple averages the most recent sales in the area. I single handedly drove the property values up in my area because I was competing with mass production artists with a business model to undercut each other with cheap buildings. Because of my sales history, real estate agents began telling other spec builders about me and I explained to them that a massed produced design creates no urgency in a buyer. They can pick up a copy any time. A unique spec house does create a sense of urgency in a buyer. My sales history of spec houses has created a higher value for my work in their mind. Unfortunately, the appraisal system has no way of recognizing my value as a designer because it's all about what my community of competitors are doing in my area.

I'm not the most talented Architect in this group, but I have watched how my product is compared to the others in my market and I'm over here shooting fish in a barrel. I'm convinced if the rest of us spent more time designing spec houses, everyone else would see similar results. Until that happens we will never convince appraisers, bankers, or clients that our work is more valuable because the cheapest made houses using the same floor plan will always be valued at the highest amount just because they enter the market as a NEW item and our beautiful houses always look over priced and not worth the expense because they typically sell as USED item at a lesser rate.

I've been asked to speak about this subject at the Reinvention Symposium in Chicago on the 19th of Oct. If you would like to hear more and can afford the trip, please join us. I hear they're setting up a dunking booth for those of you I've offended, so there's something for everyone!!!

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Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
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Michael,
Why not just interview homeowners/building owners?  Pick from a wide variety--new buildings, old buildings, architect designed, vernacular, etc.  You may have to develop a matrix and ask the consistently, correct questions to document your findings.

I hope you'll discover a pattern that favors architect-designed buildings because those buildings are a result of an investment of time, experience and creativity at the front end.  

Lynn

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Lynn Anderson AIA
Anderson Architecture, PLLC
Southern Pines NC
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Original Message:
Sent: 08-08-2012 14:21
From: Michael Gustavson
Subject: Scientific Proof that Residential Architects Are Worth It?

Eric,
Thank you for your response.  It seems that it is very difficult to get proof of the value of architecture services by comparing new construction to old construction.  Your method of determining the architects value by doing spec. homes seems to work as a sort of proof, because you are comparing new homes to new homes.  I was thinking another type of "historical" proof could come by comparing old sales of non-architect designed homes to old sales of architect designed homes.  This way the comparison is not old sale to new sale but old sale to old sale.  I wonder if some realtor organization would have this kind of historical data? If not, it definitely helps to have the story you have told about spec homes in my back pocket to try and help explain the value of hiring an architect.

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Michael Gustavson
Intern
Madison WI
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This is a situation where the AIA needs to have in place a program where they regularly fund independent research that would shed light onto questions like this. I'm certain that you could find an academic in a real estate program at some University that would be eager to do a research project that delved into property values on speculative projects built with and without architects.

Does the AIA do such things? Do they do it in areas of residential design?

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Gregory La Vardera
Architect
Gregory La Vardera Architect
Merchantville NJ
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Good idea about trying to find researchers to look into this.
It looks like the Massachusetts Institute of Technology's  Real Estate Program is looking for people to propose thesis topics.  See the bottom of the page at the following URL: http://web.mit.edu/cre/research/thesis/ 
There must be more schools looking for research topic ideas as well. 

If proof were found that architects are worth it.  The best platform for the dissemination of that knowledge just may be real estate professors.  

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Michael Gustavson
Intern
Madison WI
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Original Message:
Sent: 08-10-2012 09:16
From: Gregory La Vardera
Subject: Scientific Proof that Residential Architects Are Worth It?

This is a situation where the AIA needs to have in place a program where they regularly fund independent research that would shed light onto questions like this. I'm certain that you could find an academic in a real estate program at some University that would be eager to do a research project that delved into property values on speculative projects built with and without architects.

Does the AIA do such things? Do they do it in areas of residential design?

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Gregory La Vardera
Architect
Gregory La Vardera Architect
Merchantville NJ
-------------------------------------------

What the profession needs is better PR coming from clients. We do not need the AIA to tell the world how great we are. The client is the key. To change the culture we must change clients opinion of us. Those clients that have worked with architects need to do the selling for us. Tot here piers who will build.
I have to share this statement. One client's opinion about one architect. I think it sums up the problem.This client has built many houses and worked with many architects.

Thanks Don, I'm excited about this project,... and really like working with you on it . You have the unusual qualities of both being a superbly creative architect,..and a " regular guy",.,,,,not often found.

The profession is not seem as regular people, we are not seen as approachable. We are seen as indispensable. We are not seen as adding value. The list goes. Until we approach our work from the point of view of other businesses  that have the customer in mind we will not make inroads into the hearts of the consumers.

Many architects have figured this out. We are the ones that have work and will continue to have work. We do not have sell our value,  our current and past clients do that. It may not be how we are educated and trained but it would be worth adding class or two to the curriculum.  Instead of studying "Great Architects" maybe we should study people who have built great business.

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Donald Duffy AIA
Don Duffy Architecture
Charlotte NC
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Original Message:
Sent: 08-10-2012 09:16
From: Gregory La Vardera
Subject: Scientific Proof that Residential Architects Are Worth It?

This is a situation where the AIA needs to have in place a program where they regularly fund independent research that would shed light onto questions like this. I'm certain that you could find an academic in a real estate program at some University that would be eager to do a research project that delved into property values on speculative projects built with and without architects.

Does the AIA do such things? Do they do it in areas of residential design?

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Gregory La Vardera
Architect
Gregory La Vardera Architect
Merchantville NJ
-------------------------------------------

This is anecdotal evidence about the value of one architect.  What I am looking for instead is empirical evidence using a broad or narrow brush stroke of all architects, good and bad.  I'm looking for statistics that would be useful for everyone, including non-architects.  Imagine if every residential architect in the country was able to post on their marketing materials that a dependable outside research organization found that: "the average architect designed home in America sells for 5% more than the average non-architect designed home with the same construction costs."  or that "the average architect designed home sells 65 days faster than the average non-architect designed home in America."  It would benefit the profession as a whole.  We however, do not have this type of data anywhere as far as I know.  I'm trying to find it, or hoping that someone eventually does the research.  Still looking.

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Michael Gustavson
Intern
Madison WI
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Original Message:
Sent: 08-13-2012 13:50
From: Donald Duffy
Subject: Scientific Proof that Residential Architects Are Worth It?

What the profession needs is better PR coming from clients. We do not need the AIA to tell the world how great we are. The client is the key. To change the culture we must change clients opinion of us. Those clients that have worked with architects need to do the selling for us. Tot here piers who will build.
I have to share this statement. One client's opinion about one architect. I think it sums up the problem.This client has built many houses and worked with many architects.

Thanks Don, I'm excited about this project,... and really like working with you on it . You have the unusual qualities of both being a superbly creative architect,..and a " regular guy",.,,,,not often found.

The profession is not seem as regular people, we are not seen as approachable. We are seen as indispensable. We are not seen as adding value. The list goes. Until we approach our work from the point of view of other businesses  that have the customer in mind we will not make inroads into the hearts of the consumers.

Many architects have figured this out. We are the ones that have work and will continue to have work. We do not have sell our value,  our current and past clients do that. It may not be how we are educated and trained but it would be worth adding class or two to the curriculum.  Instead of studying "Great Architects" maybe we should study people who have built great business.

-------------------------------------------
Donald Duffy AIA
Don Duffy Architecture
Charlotte NC
-------------------------------------------







Original Message:
Sent: 08-10-2012 09:16
From: Gregory La Vardera
Subject: Scientific Proof that Residential Architects Are Worth It?

This is a situation where the AIA needs to have in place a program where they regularly fund independent research that would shed light onto questions like this. I'm certain that you could find an academic in a real estate program at some University that would be eager to do a research project that delved into property values on speculative projects built with and without architects.

Does the AIA do such things? Do they do it in areas of residential design?

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Gregory La Vardera
Architect
Gregory La Vardera Architect
Merchantville NJ
-------------------------------------------

Michael,
I appreciate your curiosity on the subject, but the data you're looking for can only be found if Architects would design a lot more spec houses. It can take 20-30 years for a custom Architectural house designed for an end user to sell and then it's sold at USED prices. This skews the results when comparing the sales histories of the more popular delivery method of spec houses sold as NEW items. This difference in the type of house that reaches market makes us look bad if compared equally. We might design 3% of the houses, yet builders are creating over 80% of the houses at spec. When a lousy spec house sells right away as a never been occupied before NEW house for a NEW house price this will skew your data if you can't find enough Architects designing NEW spec houses too. Right now you'd be comparing apples and oranges. There is no scientific proof to be found.

A custom designed house for an end user is like building a custom car in your garage. You can't put a price on a custom object that has never been tested at market. I was the wood shop guy at Architecture School and my last year I was the Acting Director. I built a custom acoustic guitar from scratch to inspire the new kids coming into the school. The guitar had a unique design with the sides sloping in toward the back. I called it a cone back design. Years later I tried to get it appraised for home insurance purposes and they couldn't put a number on it because there's nothing like it and I never sold one, so it's only worth what a basic cheap guitar found in a store is worth. Had I made a couple similar to the original and sold them, then the price I fetched would be what they're worth. 

I think you're raising a good question that the rest of us should think about. If a significant number of us are not designing some of the houses that are designed to sell, then how can we prove what are we worth? Your question can only be answered when more Architects begin designing spec houses. We're smart people, yet I keep hearing so many trying to rationalize how we can keep doing the same thing and expect different results. Evolve or die, that's how this cruel world works.

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Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
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Original Message:
Sent: 08-14-2012 02:34
From: Michael Gustavson
Subject: Scientific Proof that Residential Architects Are Worth It?

This is anecdotal evidence about the value of one architect.  What I am looking for instead is empirical evidence using a broad or narrow brush stroke of all architects, good and bad.  I'm looking for statistics that would be useful for everyone, including non-architects.  Imagine if every residential architect in the country was able to post on their marketing materials that a dependable outside research organization found that: "the average architect designed home in America sells for 5% more than the average non-architect designed home with the same construction costs."  or that "the average architect designed home sells 65 days faster than the average non-architect designed home in America."  It would benefit the profession as a whole.  We however, do not have this type of data anywhere as far as I know.  I'm trying to find it, or hoping that someone eventually does the research.  Still looking.

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Michael Gustavson
Intern
Madison WI
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Original Message:
Sent: 08-13-2012 13:50
From: Donald Duffy
Subject: Scientific Proof that Residential Architects Are Worth It?

What the profession needs is better PR coming from clients. We do not need the AIA to tell the world how great we are. The client is the key. To change the culture we must change clients opinion of us. Those clients that have worked with architects need to do the selling for us. Tot here piers who will build.
I have to share this statement. One client's opinion about one architect. I think it sums up the problem.This client has built many houses and worked with many architects.

Thanks Don, I'm excited about this project,... and really like working with you on it . You have the unusual qualities of both being a superbly creative architect,..and a " regular guy",.,,,,not often found.

The profession is not seem as regular people, we are not seen as approachable. We are seen as indispensable. We are not seen as adding value. The list goes. Until we approach our work from the point of view of other businesses  that have the customer in mind we will not make inroads into the hearts of the consumers.

Many architects have figured this out. We are the ones that have work and will continue to have work. We do not have sell our value,  our current and past clients do that. It may not be how we are educated and trained but it would be worth adding class or two to the curriculum.  Instead of studying "Great Architects" maybe we should study people who have built great business.

-------------------------------------------
Donald Duffy AIA
Don Duffy Architecture
Charlotte NC
-------------------------------------------







Original Message:
Sent: 08-10-2012 09:16
From: Gregory La Vardera
Subject: Scientific Proof that Residential Architects Are Worth It?

This is a situation where the AIA needs to have in place a program where they regularly fund independent research that would shed light onto questions like this. I'm certain that you could find an academic in a real estate program at some University that would be eager to do a research project that delved into property values on speculative projects built with and without architects.

Does the AIA do such things? Do they do it in areas of residential design?

-------------------------------------------
Gregory La Vardera
Architect
Gregory La Vardera Architect
Merchantville NJ
-------------------------------------------

Better recommendations from existing clients is only one piece of the puzzle. The other is a public awareness campaign and the $2.50 we have available to spend on marketing could be greatly leveraged if the AIA would mount a successful outreach campaign on behalf of all of us, using the money we contribute.

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Sean Catherall AIA
Integrated Property Services
Bluffdale UT
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Original Message:
Sent: 08-13-2012 13:50
From: Donald Duffy
Subject: Scientific Proof that Residential Architects Are Worth It?

What the profession needs is better PR coming from clients. We do not need the AIA to tell the world how great we are. The client is the key. To change the culture we must change clients opinion of us. Those clients that have worked with architects need to do the selling for us. Tot here piers who will build.
I have to share this statement. One client's opinion about one architect. I think it sums up the problem.This client has built many houses and worked with many architects.

Thanks Don, I'm excited about this project,... and really like working with you on it . You have the unusual qualities of both being a superbly creative architect,..and a " regular guy",.,,,,not often found.

The profession is not seem as regular people, we are not seen as approachable. We are seen as indispensable. We are not seen as adding value. The list goes. Until we approach our work from the point of view of other businesses  that have the customer in mind we will not make inroads into the hearts of the consumers.

Many architects have figured this out. We are the ones that have work and will continue to have work. We do not have sell our value,  our current and past clients do that. It may not be how we are educated and trained but it would be worth adding class or two to the curriculum.  Instead of studying "Great Architects" maybe we should study people who have built great business.

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Donald Duffy AIA
Don Duffy Architecture
Charlotte NC
-------------------------------------------

Here is the research opportunity webpage: http://www.aia.org/practicing/research/AIAB090023

You will see the 2012 AIA Innovation and Practice in House Design Research Grant listed. There are plans to offer grants in 2013.

Also:

Upjohn Research Grant
Upcoming Deadline: September 1, 2012
2012 Call for Submissions

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Kathleen Simpson
Manager, Knowledge Communities
The American Institute of Architects
Washington DC
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Original Message:
Sent: 08-10-2012 09:16
From: Gregory La Vardera
Subject: Scientific Proof that Residential Architects Are Worth It?

This is a situation where the AIA needs to have in place a program where they regularly fund independent research that would shed light onto questions like this. I'm certain that you could find an academic in a real estate program at some University that would be eager to do a research project that delved into property values on speculative projects built with and without architects.

Does the AIA do such things? Do they do it in areas of residential design?

-------------------------------------------
Gregory La Vardera
Architect
Gregory La Vardera Architect
Merchantville NJ
-------------------------------------------

Good Morning Michael,

I have seen several responses to your request for data, none particularly helpful to you.

Hey CRAN folks, here is a soldier (Michael) trying to help us by assimilating data to help us prove that what we design is worth more!  Let's give him some data, okay?

I think that any residential architect should be able to quote you how much per square foot their homes sold for.  That, in my mind, is the great equalizer, and common denominator.  For instance, in an up market, one of the homes I designed went for $833/HSF (Heated Square Feet).  It was very custom, inside and out and had a view of a large, rare, high-mountain lake in a community of high-end homes. Lots of stone, heavy timber, large windows, custom finishes.  I had another go for $416/HSF, also in a very nice community, but the view was not as commanding.  Those were back in the Boom.  After the bust, I had one of my mid-range homes go for $260.31 in a distressed situation, which means this is an under-valued position that will likely correct itself in future resales of that home.  For instance, that home appraised for $704.46/HSF back in the Boom. 

You will need to carefully review the parameters that today's appraisers use and put that into a spreadsheet format, then when you see new characteristics that architects add to a project, such as improved aesthetics or improved functionality or improved energy efficiency, add those characteristics to a new and improved Proposed appraisal method that you and others in this forum might wish to consider offering to a national appraisal organization along with a national association of banks, to help them correct their antiquated appraisal methods that are not presently incorporating characteristics that architects' designs add to a home, increasing its value.

There are others in this forum that are much more aligned to this effort than I am and I hope that they will give you some actual math data about $/HSF that you can use.  Of course, you will need some follow-up with such offerers of data, to quiz them as to what features those homes had, their locations and other parameters, to help you quantify the value that an architect brings to the equation.

I applaud your quest and hope that us architects out here actually designing homes that we believe are more valuable than what builders and others are producing will furnish you with the data you need to help us Document this. 

I understand that without such documentation that your search will be fruitless and so will the AIA's chance of changing appraisal methods.  You are trying to do it the right way: not with rhetoric, but with actual hard numbers, comparing architect-designed home prices (per HSF) against non-architect created homes (per HSF).  When well-intentioned architects provide you with numbers (like I just did above), such offerings will of course be lacking in detail.  You will need that detail information (location, features, etc) to flush out your study.  What you are trying to do is worthy of a Master's or Doctoral Thesis.  You are trying to improve today's housing appraisal methods.  I believe this is possible, if only those of us who are designing these homes will give you the information you need.  Therefore, whenever anyone offers you such information, I suggest that you send them an e-mail, requesting more detailed information, so that the numbers have relevance to your developing Master Housing Appraisal Spreadsheet.

By the way, my wife is real estate broker and does CMAs (Comparative Market Analyses) for banks in our area, and she also sells them.  I have compared what she does to full-blown appraisals and don't see much difference in the methods.  A lot of the value of the house comes down to what the comparable sales went for, having comparable square footages and features (to the best of the appraising professional's knowledge).  And here is what we are all trying to influence: the appraising individual's knowledge. 

If people like Michael here can get the information from us he needs to produce an influential document Proving that most architect-design homes do in fact sell for more, this might lead to a line item on the standard appraisal methods sheets that state something like:
WAS THIS HOME DESIGNED BY A LICENSED ARCHITECT?  IF SO, ADD 20% TO THE OVERALL VALUE.
I think that is probably what we are all after, isn't it?

So: Let's all help Michael!  Send him for sale values on an per HSF basis (or whatever basis he needs it).  Thank you, one and all.


-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------

Rand is making a good point about beginning the tracking process, but as pointed out, these values mean nothing unless compared to all of the sales that happened around the same time period within the same neighborhood. Otherwise what are we comparing? We can't just cherry pick our favorites and call this a legitimate analysis. The Real Estate web sites like MLS listings can provide all of this information, but you typically have to pay for access or be a licensed agent. Unfortunately, they don't have a check box for Licensed Architect designed. 

I've done these comparisons to my own work and even my top sellers of that year in the same area are not always pricing out as well per sf as the builder boxes that hit that exact sweet spot of being able to qualify as a comp to my houses, but they build the least amount of floor area to do it. Example: In 2009 I had a 5 bed, 4.5 bath house with 3,792 sf sell for $785K or $207/sf. The low sale within a year of that sale was for a "comparable" mass produced box with 5 bed, 4 bath and 2,578 sf for $615K or $239/sf. These builders know how to game the system and take advantage of how appraisals work. BOth of these were spec houses within a 1/2 mile of each other. My house sold Jan 2009, when we had no idea if the banking system would exist for another week and the other house was able to use my sale as a comp at the beginning of 2010, when things were a little bit better. My house was used as the top comp by everyone like this for two years after the sale due to lack of sales available for comps. Mine was also the largest built at the time which is never favorable on the appraisals, so the bank limits the loan they are willing to give based on how it appraises. If you're on top, you only have one direction to go on an appraisal and that's down. If you hover at the bottom, then you have only one way to go and that's up.

With all that said, what I'm trying to get at is we may find ourselves very disappointed when comparing our higher sales as a $$$/sf value when we start analyzing how the El Cheapo houses price out. We can't say we're better without including what all the other houses are selling for in that area at that time. My suggestion is that the AIA may be able to ask MLS (and related sites) to include a check box for Licensed Architect Designed for each house that sells. This could be a good way for the State Boards to crack down on those claiming Architect titles when using that as a sales hook. In the Atlanta area they started doing this for green certification several years ago.

Part of my Appraisal Reform solution would require a central data base like MLS to record the Builder and Designers involved in all new sales so we can comp the work of the creators against their own work and pay a separate market price/ sf for the land to isolate the mystery of location and fluctuating market value of land. This way we can see exactly what people are paying for the house by itself and stop allowing the lousiest builders who sell their homes for the lowest price to be able to use our work as a comp to raise their own appraisal value and also forcing us to use comps for houses that have a history of not selling as well to degrade the values of our products. After all, the bank wants to know what that specific investment will sell for at market and not what any old house that happens to have 5 beds, 4 baths and is close the the same floor area will sell for. They should be interested if their investment was designed and built by a company with low or high sales histories. These two endeavors seem very related to me. What do you say Rand...Michael?

If you can make to Reinvention in Chicago this year, I'll be speaking on the subject of Appraisal Reform on Friday, Oct19th.

-------------------------------------------
Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
-------------------------------------------







Original Message:
Sent: 08-15-2012 07:53
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Good Morning Michael,

I have seen several responses to your request for data, none particularly helpful to you.

Hey CRAN folks, here is a soldier (Michael) trying to help us by assimilating data to help us prove that what we design is worth more!  Let's give him some data, okay?

I think that any residential architect should be able to quote you how much per square foot their homes sold for.  That, in my mind, is the great equalizer, and common denominator.  For instance, in an up market, one of the homes I designed went for $833/HSF (Heated Square Feet).  It was very custom, inside and out and had a view of a large, rare, high-mountain lake in a community of high-end homes. Lots of stone, heavy timber, large windows, custom finishes.  I had another go for $416/HSF, also in a very nice community, but the view was not as commanding.  Those were back in the Boom.  After the bust, I had one of my mid-range homes go for $260.31 in a distressed situation, which means this is an under-valued position that will likely correct itself in future resales of that home.  For instance, that home appraised for $704.46/HSF back in the Boom. 

You will need to carefully review the parameters that today's appraisers use and put that into a spreadsheet format, then when you see new characteristics that architects add to a project, such as improved aesthetics or improved functionality or improved energy efficiency, add those characteristics to a new and improved Proposed appraisal method that you and others in this forum might wish to consider offering to a national appraisal organization along with a national association of banks, to help them correct their antiquated appraisal methods that are not presently incorporating characteristics that architects' designs add to a home, increasing its value.

There are others in this forum that are much more aligned to this effort than I am and I hope that they will give you some actual math data about $/HSF that you can use.  Of course, you will need some follow-up with such offerers of data, to quiz them as to what features those homes had, their locations and other parameters, to help you quantify the value that an architect brings to the equation.

I applaud your quest and hope that us architects out here actually designing homes that we believe are more valuable than what builders and others are producing will furnish you with the data you need to help us Document this. 

I understand that without such documentation that your search will be fruitless and so will the AIA's chance of changing appraisal methods.  You are trying to do it the right way: not with rhetoric, but with actual hard numbers, comparing architect-designed home prices (per HSF) against non-architect created homes (per HSF).  When well-intentioned architects provide you with numbers (like I just did above), such offerings will of course be lacking in detail.  You will need that detail information (location, features, etc) to flush out your study.  What you are trying to do is worthy of a Master's or Doctoral Thesis.  You are trying to improve today's housing appraisal methods.  I believe this is possible, if only those of us who are designing these homes will give you the information you need.  Therefore, whenever anyone offers you such information, I suggest that you send them an e-mail, requesting more detailed information, so that the numbers have relevance to your developing Master Housing Appraisal Spreadsheet.

By the way, my wife is real estate broker and does CMAs (Comparative Market Analyses) for banks in our area, and she also sells them.  I have compared what she does to full-blown appraisals and don't see much difference in the methods.  A lot of the value of the house comes down to what the comparable sales went for, having comparable square footages and features (to the best of the appraising professional's knowledge).  And here is what we are all trying to influence: the appraising individual's knowledge. 

If people like Michael here can get the information from us he needs to produce an influential document Proving that most architect-design homes do in fact sell for more, this might lead to a line item on the standard appraisal methods sheets that state something like:
WAS THIS HOME DESIGNED BY A LICENSED ARCHITECT?  IF SO, ADD 20% TO THE OVERALL VALUE.
I think that is probably what we are all after, isn't it?

So: Let's all help Michael!  Send him for sale values on an per HSF basis (or whatever basis he needs it).  Thank you, one and all.


-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------

Eric, I am in agreement with your suggestion that appraisals of all types, including BPOs (Broker Price Opinions) and CMAs (Comparable Market Analyses) should have some identification of "Licensed Architect Designed" or not.  This could simply be accomplished by having a checkbox on the appraisal/BPO/CMA form that indicates something as simple as: "WAS THIS HOME DESIGNED BY AN ARCHITECT?  IF SO, ADD 20% TO THE TOTAL VALUATION."  If indeed, that is the added value someone like Michael discovers is the appropriate amount to add to a home for having been designed by an architect.  20% is my off the cuff guesstimate, as an architect doing this for about 37 years.  Under certain circumstances, it could be more; it could be less.  For instance, what would be the valuation of Falling Water today?  Architectural icons would be the exception to the rule. 

GOAL: CREATE A SINGLE LINE ITEM FORMULA:
It appears that what Michael is trying to do is to come up with a "one size fits all" equation and I respect and appreciate that. People will say that approach is too simplistic.  Well, I have seen line items on some appraiser's forms that say simplistic things like: "Add $50,000 for a stone front porch and stone steps."  If appraisals can be that simplistic, then let's go ahead and become part of the calculation with at least some added valuation factor.  That would be better the present situation for having a home designed by an architect, which is: zero.  Something, even an overly simplistic increased factor is better than nothing.

SOME ARCHITECTS AND OTHERS WILL CREATE STATIC:
Michael, you are going to encounter some resistance to your efforts.  Do not that that deter you.  All the residential architects in the AIA (and those also not in the AIA) appreciate what you are doing and thank you.  Even if they give you negative comments about being "simplistic", they will directly benefit from your Research and Development and they should be thanking you and helping you.  It is through scientific data gathering like yours that will result, hopefully, in making a nationwide improvement in how the public perceives the value of real architects and come to understand that our fee for designing their home will come back to them at resale time due to appraisal reforms brought about by people like you and Eric and others.  Please continue.  Fight the good fight.  And oh, of course there are other things that bring our fee back to them, such as: reduced monthly power bills, due to an architect's efforts to improve the building envelope's sealing and higher insulation levels, proper overhangs to control sun, proper choice of windows, doors, siding and other factors.  Then there are the aesthetic values that are intangible, but priceless, like properly orienting a home to a wonderful view, shielding private spaces from the street and opening those same private areas to the views, sensible organization, efficient space planning and capturing a client's lifestyle in the design, which an off-the-rack builder home simply cannot accomplish.

Some people will say: "but all architects are not the same.  Some don't create homes that have as saleable features as others, yadda, yadda."  Yeah, well, the same can be said of builders and others in the entire home creation, valuation and building cycle.  And the appraisers muddle through it all, don't they?  Making a mess of it generally, but they do forge ahead.  All we are trying to do is make just one adjustment in the method: that in general, having a competent, capable licensed architect design your home should result in a better sales price.  Is this a guarantee?  No.  Of course not.  Neither is being in a good neighborhood.  We have all seen exceptions to the rule.  What is being sought here is an improvement in the appraisal methods through the addition of JUST ONE LINE ITEM that adjusts a home's value upward due to the fact that a home was designed by a real architect.

GOAL OF MICHAEL'S STUDY: GETTING ONE LINE ITEM ADDED TO APPRAISALS AND BPOs AND CMAs: And I think that should be your goal, Michael:  you are trying to get just one line item added to an appraisal form.  And that will be enough to help us all.  Please do your study.  I suggest you begin by creating an Excel spreadsheet, copying verbatim a nationally accepted appraisal form.  Then, somewhere, down around the bottom of this, look where you can insert the new "Architect Designed Value Added" line item that pumps up the whole value by a factor that your study supports.  This new spreadsheet of yours + your data will hopefully result in a game-change for home appraisals. 

BPO/CMA/ REAL ESTATE BROKERS/INTERMEDIARY BPO SOLICITATION COMPANIES:
Note that you are not done, with just appraisals!  THERE ARE PROBABLY 4X MORE BPOs AND CMAs CONDUCTED BY REAL ESTATE BROKERS THAN THERE ARE OFFICIAL APPRAISALS.  Banks and other lenders that are foreclosing on homes are the ones who solicit for and pay real estate brokers to create BPOs and CMAs.  Why?  Because a real estate broker will do it for much less than appraiser.  Also, it is the real estate broker who has direct access to the MLS (Multiple Listing Service), which is where the data comes from to support Listing Prices and Sales Prices.  And due to the volume of foreclosures over the last several years (millions), banks had to find some alternate method of valuing their sudden glut of repossessed homes and other properties.  Therefore, they sought the assistance of real estate brokers.  Therefore, once you, Michael, hopefully with the AIA's help (and the assistance of other organizations as well, we hope) tackle the appraisal industry and get the Architect Value Added line item, there will need to be some sort of trickle-down effort to get this line item added to bank/financial institution BPO and CMA forms.  And here's the kicker: each form can be different for each institution.  Also, there are various intermediaries that act as work-brokers for the banks, like Clear Capital, who in turn go out and solicit real estate brokers to conduct the actual BPO study.  Then these intermediaries check the BPO, make sure it is as correct as possible, then they turn those BPOs over to the banks whom they represent.  Of course, they get a fee for brokering these BPO studies.  So, all these intermediary BPO solicitation companies will need to adjust their forms to add the Architect Value-Added line item as well.  And that could very well take the entire might of the AIA to convince them to do that.  This is a big job and it will not be done overnight. 

AIA TASK FORCE NEEDED
The AIA, with possibly you, Eric and Michael, heading a task force will need to tackle this.  It is too much for just a single individual.  Eric has been correctly ranting about this for at least a year and Mark Demerley assures me that he has been heard and that supposedly something is starting to happen within the AIA to begin correcting the appraisal process.  I hope so. 

And Eric, I would be happy to hear your talk, but my AIA dues took all my discretionary funds for events like this.  But thanks for the invitation.

Everyone: have a nice weekend. 

-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------







Original Message:
Sent: 08-16-2012 08:52
From: Eric Rawlings
Subject: Scientific Proof that Residential Architects Are Worth It?

Rand is making a good point about beginning the tracking process, but as pointed out, these values mean nothing unless compared to all of the sales that happened around the same time period within the same neighborhood. Otherwise what are we comparing? We can't just cherry pick our favorites and call this a legitimate analysis. The Real Estate web sites like MLS listings can provide all of this information, but you typically have to pay for access or be a licensed agent. Unfortunately, they don't have a check box for Licensed Architect designed. 

I've done these comparisons to my own work and even my top sellers of that year in the same area are not always pricing out as well per sf as the builder boxes that hit that exact sweet spot of being able to qualify as a comp to my houses, but they build the least amount of floor area to do it. Example: In 2009 I had a 5 bed, 4.5 bath house with 3,792 sf sell for $785K or $207/sf. The low sale within a year of that sale was for a "comparable" mass produced box with 5 bed, 4 bath and 2,578 sf for $615K or $239/sf. These builders know how to game the system and take advantage of how appraisals work. BOth of these were spec houses within a 1/2 mile of each other. My house sold Jan 2009, when we had no idea if the banking system would exist for another week and the other house was able to use my sale as a comp at the beginning of 2010, when things were a little bit better. My house was used as the top comp by everyone like this for two years after the sale due to lack of sales available for comps. Mine was also the largest built at the time which is never favorable on the appraisals, so the bank limits the loan they are willing to give based on how it appraises. If you're on top, you only have one direction to go on an appraisal and that's down. If you hover at the bottom, then you have only one way to go and that's up.

With all that said, what I'm trying to get at is we may find ourselves very disappointed when comparing our higher sales as a $$$/sf value when we start analyzing how the El Cheapo houses price out. We can't say we're better without including what all the other houses are selling for in that area at that time. My suggestion is that the AIA may be able to ask MLS (and related sites) to include a check box for Licensed Architect Designed for each house that sells. This could be a good way for the State Boards to crack down on those claiming Architect titles when using that as a sales hook. In the Atlanta area they started doing this for green certification several years ago.

Part of my Appraisal Reform solution would require a central data base like MLS to record the Builder and Designers involved in all new sales so we can comp the work of the creators against their own work and pay a separate market price/ sf for the land to isolate the mystery of location and fluctuating market value of land. This way we can see exactly what people are paying for the house by itself and stop allowing the lousiest builders who sell their homes for the lowest price to be able to use our work as a comp to raise their own appraisal value and also forcing us to use comps for houses that have a history of not selling as well to degrade the values of our products. After all, the bank wants to know what that specific investment will sell for at market and not what any old house that happens to have 5 beds, 4 baths and is close the the same floor area will sell for. They should be interested if their investment was designed and built by a company with low or high sales histories. These two endeavors seem very related to me. What do you say Rand...Michael?

If you can make to Reinvention in Chicago this year, I'll be speaking on the subject of Appraisal Reform on Friday, Oct19th.

-------------------------------------------
Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
-------------------------------------------

I love architects especially those that do good residential design but I will have to say that I have seen some architecturally design homes that because of "star-chitecture" were almost totally disfunctional. Still the idea has merit.

-------------------------------------------
S. Jones AIA
Owner
S Berry Jones - Architects
Memphis TN
-------------------------------------------







Original Message:
Sent: 08-17-2012 08:59
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Eric, I am in agreement with your suggestion that appraisals of all types, including BPOs (Broker Price Opinions) and CMAs (Comparable Market Analyses) should have some identification of "Licensed Architect Designed" or not.  This could simply be accomplished by having a checkbox on the appraisal/BPO/CMA form that indicates something as simple as: "WAS THIS HOME DESIGNED BY AN ARCHITECT?  IF SO, ADD 20% TO THE TOTAL VALUATION."  If indeed, that is the added value someone like Michael discovers is the appropriate amount to add to a home for having been designed by an architect.  20% is my off the cuff guesstimate, as an architect doing this for about 37 years.  Under certain circumstances, it could be more; it could be less.  For instance, what would be the valuation of Falling Water today?  Architectural icons would be the exception to the rule. 

GOAL: CREATE A SINGLE LINE ITEM FORMULA:
It appears that what Michael is trying to do is to come up with a "one size fits all" equation and I respect and appreciate that. People will say that approach is too simplistic.  Well, I have seen line items on some appraiser's forms that say simplistic things like: "Add $50,000 for a stone front porch and stone steps."  If appraisals can be that simplistic, then let's go ahead and become part of the calculation with at least some added valuation factor.  That would be better the present situation for having a home designed by an architect, which is: zero.  Something, even an overly simplistic increased factor is better than nothing.

SOME ARCHITECTS AND OTHERS WILL CREATE STATIC:
Michael, you are going to encounter some resistance to your efforts.  Do not that that deter you.  All the residential architects in the AIA (and those also not in the AIA) appreciate what you are doing and thank you.  Even if they give you negative comments about being "simplistic", they will directly benefit from your Research and Development and they should be thanking you and helping you.  It is through scientific data gathering like yours that will result, hopefully, in making a nationwide improvement in how the public perceives the value of real architects and come to understand that our fee for designing their home will come back to them at resale time due to appraisal reforms brought about by people like you and Eric and others.  Please continue.  Fight the good fight.  And oh, of course there are other things that bring our fee back to them, such as: reduced monthly power bills, due to an architect's efforts to improve the building envelope's sealing and higher insulation levels, proper overhangs to control sun, proper choice of windows, doors, siding and other factors.  Then there are the aesthetic values that are intangible, but priceless, like properly orienting a home to a wonderful view, shielding private spaces from the street and opening those same private areas to the views, sensible organization, efficient space planning and capturing a client's lifestyle in the design, which an off-the-rack builder home simply cannot accomplish.

Some people will say: "but all architects are not the same.  Some don't create homes that have as saleable features as others, yadda, yadda."  Yeah, well, the same can be said of builders and others in the entire home creation, valuation and building cycle.  And the appraisers muddle through it all, don't they?  Making a mess of it generally, but they do forge ahead.  All we are trying to do is make just one adjustment in the method: that in general, having a competent, capable licensed architect design your home should result in a better sales price.  Is this a guarantee?  No.  Of course not.  Neither is being in a good neighborhood.  We have all seen exceptions to the rule.  What is being sought here is an improvement in the appraisal methods through the addition of JUST ONE LINE ITEM that adjusts a home's value upward due to the fact that a home was designed by a real architect.

GOAL OF MICHAEL'S STUDY: GETTING ONE LINE ITEM ADDED TO APPRAISALS AND BPOs AND CMAs: And I think that should be your goal, Michael:  you are trying to get just one line item added to an appraisal form.  And that will be enough to help us all.  Please do your study.  I suggest you begin by creating an Excel spreadsheet, copying verbatim a nationally accepted appraisal form.  Then, somewhere, down around the bottom of this, look where you can insert the new "Architect Designed Value Added" line item that pumps up the whole value by a factor that your study supports.  This new spreadsheet of yours + your data will hopefully result in a game-change for home appraisals. 

BPO/CMA/ REAL ESTATE BROKERS/INTERMEDIARY BPO SOLICITATION COMPANIES:
Note that you are not done, with just appraisals!  THERE ARE PROBABLY 4X MORE BPOs AND CMAs CONDUCTED BY REAL ESTATE BROKERS THAN THERE ARE OFFICIAL APPRAISALS.  Banks and other lenders that are foreclosing on homes are the ones who solicit for and pay real estate brokers to create BPOs and CMAs.  Why?  Because a real estate broker will do it for much less than appraiser.  Also, it is the real estate broker who has direct access to the MLS (Multiple Listing Service), which is where the data comes from to support Listing Prices and Sales Prices.  And due to the volume of foreclosures over the last several years (millions), banks had to find some alternate method of valuing their sudden glut of repossessed homes and other properties.  Therefore, they sought the assistance of real estate brokers.  Therefore, once you, Michael, hopefully with the AIA's help (and the assistance of other organizations as well, we hope) tackle the appraisal industry and get the Architect Value Added line item, there will need to be some sort of trickle-down effort to get this line item added to bank/financial institution BPO and CMA forms.  And here's the kicker: each form can be different for each institution.  Also, there are various intermediaries that act as work-brokers for the banks, like Clear Capital, who in turn go out and solicit real estate brokers to conduct the actual BPO study.  Then these intermediaries check the BPO, make sure it is as correct as possible, then they turn those BPOs over to the banks whom they represent.  Of course, they get a fee for brokering these BPO studies.  So, all these intermediary BPO solicitation companies will need to adjust their forms to add the Architect Value-Added line item as well.  And that could very well take the entire might of the AIA to convince them to do that.  This is a big job and it will not be done overnight. 

AIA TASK FORCE NEEDED
The AIA, with possibly you, Eric and Michael, heading a task force will need to tackle this.  It is too much for just a single individual.  Eric has been correctly ranting about this for at least a year and Mark Demerley assures me that he has been heard and that supposedly something is starting to happen within the AIA to begin correcting the appraisal process.  I hope so. 

And Eric, I would be happy to hear your talk, but my AIA dues took all my discretionary funds for events like this.  But thanks for the invitation.

Everyone: have a nice weekend. 

-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------







Original Message:
Sent: 08-16-2012 08:52
From: Eric Rawlings
Subject: Scientific Proof that Residential Architects Are Worth It?

Rand is making a good point about beginning the tracking process, but as pointed out, these values mean nothing unless compared to all of the sales that happened around the same time period within the same neighborhood. Otherwise what are we comparing? We can't just cherry pick our favorites and call this a legitimate analysis. The Real Estate web sites like MLS listings can provide all of this information, but you typically have to pay for access or be a licensed agent. Unfortunately, they don't have a check box for Licensed Architect designed. 

I've done these comparisons to my own work and even my top sellers of that year in the same area are not always pricing out as well per sf as the builder boxes that hit that exact sweet spot of being able to qualify as a comp to my houses, but they build the least amount of floor area to do it. Example: In 2009 I had a 5 bed, 4.5 bath house with 3,792 sf sell for $785K or $207/sf. The low sale within a year of that sale was for a "comparable" mass produced box with 5 bed, 4 bath and 2,578 sf for $615K or $239/sf. These builders know how to game the system and take advantage of how appraisals work. BOth of these were spec houses within a 1/2 mile of each other. My house sold Jan 2009, when we had no idea if the banking system would exist for another week and the other house was able to use my sale as a comp at the beginning of 2010, when things were a little bit better. My house was used as the top comp by everyone like this for two years after the sale due to lack of sales available for comps. Mine was also the largest built at the time which is never favorable on the appraisals, so the bank limits the loan they are willing to give based on how it appraises. If you're on top, you only have one direction to go on an appraisal and that's down. If you hover at the bottom, then you have only one way to go and that's up.

With all that said, what I'm trying to get at is we may find ourselves very disappointed when comparing our higher sales as a $$$/sf value when we start analyzing how the El Cheapo houses price out. We can't say we're better without including what all the other houses are selling for in that area at that time. My suggestion is that the AIA may be able to ask MLS (and related sites) to include a check box for Licensed Architect Designed for each house that sells. This could be a good way for the State Boards to crack down on those claiming Architect titles when using that as a sales hook. In the Atlanta area they started doing this for green certification several years ago.

Part of my Appraisal Reform solution would require a central data base like MLS to record the Builder and Designers involved in all new sales so we can comp the work of the creators against their own work and pay a separate market price/ sf for the land to isolate the mystery of location and fluctuating market value of land. This way we can see exactly what people are paying for the house by itself and stop allowing the lousiest builders who sell their homes for the lowest price to be able to use our work as a comp to raise their own appraisal value and also forcing us to use comps for houses that have a history of not selling as well to degrade the values of our products. After all, the bank wants to know what that specific investment will sell for at market and not what any old house that happens to have 5 beds, 4 baths and is close the the same floor area will sell for. They should be interested if their investment was designed and built by a company with low or high sales histories. These two endeavors seem very related to me. What do you say Rand...Michael?

If you can make to Reinvention in Chicago this year, I'll be speaking on the subject of Appraisal Reform on Friday, Oct19th.

-------------------------------------------
Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
-------------------------------------------

Rand,
You're never going to convince banks, appraisal boards, the Senate Housing Committee, Congress, and all the powers that be that we Architects should get an automatic 20% value boost. It's all about sales and individual performance at market. Just because someone worked at BMW and decided to start their own car company, they still have to prove themselves at market with their own products. Not all Architects are the same, not all Architectural solutions resonate as well at market, not all of our solutions make sense in the context of the area in which they are designed. We're really good at pleasing an end user client, but can we consistently create affordable products that resonate with the people? We have a lot to prove when it comes to that, seeing how we don't design very many spec houses. If I had to put my money on the line, I'd bet on the licensed Architect, but this doesn't mean they will automatically out perform the competition when it comes to value and what people are willing to pay. The modernism we all  tend to like isn't necessarily what the general public wants. We tend to please ourselves, not the general public. 

The philosophy of the appraiser is that land has indefinite use and improvements, like houses, are only temporary. Their attitude toward "improvements" is to provide a "replacement" value based on the configuration of the subject property using the materials, methods, and market value of recent comparable sales. This basic philosophy makes sense for existing, older buildings, but not for houses 10 years or younger that still have all of the original materials in tact, like roofing, that still comply with current codes, and are built and designed by companies still in business.

New(er) home values should be based on the comparable properties of the companies building and designing them. The market value of the land should be separate from the value of the improvements, so we can see what is gaining or losing value. The skyrocketing property values of the boom are unexplainable when you try to break down what gained value, the land or house? When you compare "comparable" properties, you'll see those at the bottom gaining value and those at the top losing value, yet they are supposed to be so similar that they are "comparable". Demystifying what is what begins to expose the fundamental problems with the system itself. It would be easy to implement on spec houses because they are products in every sense of the word, they make up over 80% of all new houses being built, and they instantly create sales histories. The only reason the overwhelming majority of spec house builders use the Walmart business model of mass producing the cheapest house possible to undercut the competition is because when you're sales are at the bottom, then you only have one way to go on the appraisal when your values are averaged out with your competition and that's up. If you're a schmuck like me and your spec houses sell for the most in the area, there's only one way to go on the appraisal when averaged against your competition and that's down.

The real trick is trying to get the highest sale without spending too much money and this is a skill not ALL Architects are good at. When you have to use the same kit of pieces and parts to create a more desirable house, then you have to rely on design alone. I have to argue that many Architects tend to spend A LOT more money to achieve better results. With my builders, we're spending a little more money to get much better results and it's still very tough competing with these guys. If we were all held to our own sales histories, then design would actually matter and the lousiest spec builders wouldn't be using our sales to justify more value for themselves while building the lowest quality buildings.

The only way we can have a significant influence over the housing industry is to design spec houses.The only way builders can afford for us to join in the game is for design to matter. When value is based on an average, design doesn't matter. We fix this and we open up a HUGE marketplace for Architects to prove their designs are more valuable. We have to prove this as individuals. We are not going to change a basic mentality of sales and value that has existed for thousands of years because Michael does a study. In fact, I'll bet Michael ends up seriously disappointed when seeing how our houses sell compared to the money our clients end up spending. The system is broken and this is what prevents us from being involved at a greater capacity. Banks aren't looking for a hypothetical replacement cost on their investments based on the average job everyone is doing. They're looking for the most likely value that particular investment will sell for and this is the fundamental difference between the appraiser's philosophy and the data the bank really wants. We need to sell that to the banks, not in terms of how to apply more value to OUR work, but how to prevent the majority of spec houses from being overvalued because one company does a really good job and their community of competitors are able to get dozens of loans based on one sale of a more successful competitor.



-------------------------------------------
Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
-------------------------------------------







Original Message:
Sent: 08-17-2012 08:59
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Eric, I am in agreement with your suggestion that appraisals of all types, including BPOs (Broker Price Opinions) and CMAs (Comparable Market Analyses) should have some identification of "Licensed Architect Designed" or not.  This could simply be accomplished by having a checkbox on the appraisal/BPO/CMA form that indicates something as simple as: "WAS THIS HOME DESIGNED BY AN ARCHITECT?  IF SO, ADD 20% TO THE TOTAL VALUATION."  If indeed, that is the added value someone like Michael discovers is the appropriate amount to add to a home for having been designed by an architect.  20% is my off the cuff guesstimate, as an architect doing this for about 37 years.  Under certain circumstances, it could be more; it could be less.  For instance, what would be the valuation of Falling Water today?  Architectural icons would be the exception to the rule. 

GOAL: CREATE A SINGLE LINE ITEM FORMULA:
It appears that what Michael is trying to do is to come up with a "one size fits all" equation and I respect and appreciate that. People will say that approach is too simplistic.  Well, I have seen line items on some appraiser's forms that say simplistic things like: "Add $50,000 for a stone front porch and stone steps."  If appraisals can be that simplistic, then let's go ahead and become part of the calculation with at least some added valuation factor.  That would be better the present situation for having a home designed by an architect, which is: zero.  Something, even an overly simplistic increased factor is better than nothing.

SOME ARCHITECTS AND OTHERS WILL CREATE STATIC:
Michael, you are going to encounter some resistance to your efforts.  Do not that that deter you.  All the residential architects in the AIA (and those also not in the AIA) appreciate what you are doing and thank you.  Even if they give you negative comments about being "simplistic", they will directly benefit from your Research and Development and they should be thanking you and helping you.  It is through scientific data gathering like yours that will result, hopefully, in making a nationwide improvement in how the public perceives the value of real architects and come to understand that our fee for designing their home will come back to them at resale time due to appraisal reforms brought about by people like you and Eric and others.  Please continue.  Fight the good fight.  And oh, of course there are other things that bring our fee back to them, such as: reduced monthly power bills, due to an architect's efforts to improve the building envelope's sealing and higher insulation levels, proper overhangs to control sun, proper choice of windows, doors, siding and other factors.  Then there are the aesthetic values that are intangible, but priceless, like properly orienting a home to a wonderful view, shielding private spaces from the street and opening those same private areas to the views, sensible organization, efficient space planning and capturing a client's lifestyle in the design, which an off-the-rack builder home simply cannot accomplish.

Some people will say: "but all architects are not the same.  Some don't create homes that have as saleable features as others, yadda, yadda."  Yeah, well, the same can be said of builders and others in the entire home creation, valuation and building cycle.  And the appraisers muddle through it all, don't they?  Making a mess of it generally, but they do forge ahead.  All we are trying to do is make just one adjustment in the method: that in general, having a competent, capable licensed architect design your home should result in a better sales price.  Is this a guarantee?  No.  Of course not.  Neither is being in a good neighborhood.  We have all seen exceptions to the rule.  What is being sought here is an improvement in the appraisal methods through the addition of JUST ONE LINE ITEM that adjusts a home's value upward due to the fact that a home was designed by a real architect.

GOAL OF MICHAEL'S STUDY: GETTING ONE LINE ITEM ADDED TO APPRAISALS AND BPOs AND CMAs: And I think that should be your goal, Michael:  you are trying to get just one line item added to an appraisal form.  And that will be enough to help us all.  Please do your study.  I suggest you begin by creating an Excel spreadsheet, copying verbatim a nationally accepted appraisal form.  Then, somewhere, down around the bottom of this, look where you can insert the new "Architect Designed Value Added" line item that pumps up the whole value by a factor that your study supports.  This new spreadsheet of yours + your data will hopefully result in a game-change for home appraisals. 

BPO/CMA/ REAL ESTATE BROKERS/INTERMEDIARY BPO SOLICITATION COMPANIES:
Note that you are not done, with just appraisals!  THERE ARE PROBABLY 4X MORE BPOs AND CMAs CONDUCTED BY REAL ESTATE BROKERS THAN THERE ARE OFFICIAL APPRAISALS.  Banks and other lenders that are foreclosing on homes are the ones who solicit for and pay real estate brokers to create BPOs and CMAs.  Why?  Because a real estate broker will do it for much less than appraiser.  Also, it is the real estate broker who has direct access to the MLS (Multiple Listing Service), which is where the data comes from to support Listing Prices and Sales Prices.  And due to the volume of foreclosures over the last several years (millions), banks had to find some alternate method of valuing their sudden glut of repossessed homes and other properties.  Therefore, they sought the assistance of real estate brokers.  Therefore, once you, Michael, hopefully with the AIA's help (and the assistance of other organizations as well, we hope) tackle the appraisal industry and get the Architect Value Added line item, there will need to be some sort of trickle-down effort to get this line item added to bank/financial institution BPO and CMA forms.  And here's the kicker: each form can be different for each institution.  Also, there are various intermediaries that act as work-brokers for the banks, like Clear Capital, who in turn go out and solicit real estate brokers to conduct the actual BPO study.  Then these intermediaries check the BPO, make sure it is as correct as possible, then they turn those BPOs over to the banks whom they represent.  Of course, they get a fee for brokering these BPO studies.  So, all these intermediary BPO solicitation companies will need to adjust their forms to add the Architect Value-Added line item as well.  And that could very well take the entire might of the AIA to convince them to do that.  This is a big job and it will not be done overnight. 

AIA TASK FORCE NEEDED
The AIA, with possibly you, Eric and Michael, heading a task force will need to tackle this.  It is too much for just a single individual.  Eric has been correctly ranting about this for at least a year and Mark Demerley assures me that he has been heard and that supposedly something is starting to happen within the AIA to begin correcting the appraisal process.  I hope so. 

And Eric, I would be happy to hear your talk, but my AIA dues took all my discretionary funds for events like this.  But thanks for the invitation.

Everyone: have a nice weekend. 

-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------







Original Message:
Sent: 08-16-2012 08:52
From: Eric Rawlings
Subject: Scientific Proof that Residential Architects Are Worth It?

Rand is making a good point about beginning the tracking process, but as pointed out, these values mean nothing unless compared to all of the sales that happened around the same time period within the same neighborhood. Otherwise what are we comparing? We can't just cherry pick our favorites and call this a legitimate analysis. The Real Estate web sites like MLS listings can provide all of this information, but you typically have to pay for access or be a licensed agent. Unfortunately, they don't have a check box for Licensed Architect designed. 

I've done these comparisons to my own work and even my top sellers of that year in the same area are not always pricing out as well per sf as the builder boxes that hit that exact sweet spot of being able to qualify as a comp to my houses, but they build the least amount of floor area to do it. Example: In 2009 I had a 5 bed, 4.5 bath house with 3,792 sf sell for $785K or $207/sf. The low sale within a year of that sale was for a "comparable" mass produced box with 5 bed, 4 bath and 2,578 sf for $615K or $239/sf. These builders know how to game the system and take advantage of how appraisals work. BOth of these were spec houses within a 1/2 mile of each other. My house sold Jan 2009, when we had no idea if the banking system would exist for another week and the other house was able to use my sale as a comp at the beginning of 2010, when things were a little bit better. My house was used as the top comp by everyone like this for two years after the sale due to lack of sales available for comps. Mine was also the largest built at the time which is never favorable on the appraisals, so the bank limits the loan they are willing to give based on how it appraises. If you're on top, you only have one direction to go on an appraisal and that's down. If you hover at the bottom, then you have only one way to go and that's up.

With all that said, what I'm trying to get at is we may find ourselves very disappointed when comparing our higher sales as a $$$/sf value when we start analyzing how the El Cheapo houses price out. We can't say we're better without including what all the other houses are selling for in that area at that time. My suggestion is that the AIA may be able to ask MLS (and related sites) to include a check box for Licensed Architect Designed for each house that sells. This could be a good way for the State Boards to crack down on those claiming Architect titles when using that as a sales hook. In the Atlanta area they started doing this for green certification several years ago.

Part of my Appraisal Reform solution would require a central data base like MLS to record the Builder and Designers involved in all new sales so we can comp the work of the creators against their own work and pay a separate market price/ sf for the land to isolate the mystery of location and fluctuating market value of land. This way we can see exactly what people are paying for the house by itself and stop allowing the lousiest builders who sell their homes for the lowest price to be able to use our work as a comp to raise their own appraisal value and also forcing us to use comps for houses that have a history of not selling as well to degrade the values of our products. After all, the bank wants to know what that specific investment will sell for at market and not what any old house that happens to have 5 beds, 4 baths and is close the the same floor area will sell for. They should be interested if their investment was designed and built by a company with low or high sales histories. These two endeavors seem very related to me. What do you say Rand...Michael?

If you can make to Reinvention in Chicago this year, I'll be speaking on the subject of Appraisal Reform on Friday, Oct19th.

-------------------------------------------
Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
-------------------------------------------

Eric,
This is not my fight, so I am not going to try to convince anyone to do anything.  This is your battleground.  I was only trying to help you and Michael by suggesting a simple method that might possibly find its way onto appraisal spreadsheets and onto BPOs and CMAs (Broker Price Opinions, Comparative Market Analyses).  If you are going to demand, or even suggest, that appraisers and real estate brokers have to prepare a custom valuation for each and every different architect, assessing their individual track records on all of their homes they have designed (and where would that data be accessed, if it exists?), then I believe that you would be complicating the appraiser's task so far beyond the fee they receive for conducting the appraisal or BPO or CMA, that appraisers and real estate brokers would fight such a suggestion tooth and nail. 

Why?  Because they only get about $600 or so to create an appraisal.  And real estate brokers only get between $35 to $65 for a BPO or CMA.  It already takes them about 6 hours to prepare these evaluations, and it requires that they go to the subject property and take multiple photographs as well.  The point is that: if you are trying to compel the appraiser or broker to in addition to their already demanding task, to also have to conduct an additional evaluation and assessment of the added value of each and every different architect designing the subject properties, this would likely be viewed as an over-complication in the process from their viewpoint.  I believe that this process has to be simple.

What I had suggested was a simple, single additional line item: "Was this home designed by an architect?  If so, multiply the value of the home by ____% and add this to the total."  Anything more complicated than this is likely, in my opinion, to be met with intense resistance from the people who perform this work.  It is understood that this is an oversimplification.  Got that.  However, asking appraisers and brokers to double their work by trying to evaluate each and every one of us architects and perhaps a decades-long track record for each architect will not only be near impossible (as I mentioned, where would they even locate that data? or know where to look?), they will balk at the increase in their work for no additional compensation. 

Sort of like some outside entity coming to the AIA and demanding that all architects henceforth must add another 5 drawing sheets to each of our sets, detailing something or other that outside group felt was important.  How would we react to that?  Resistance, big time.  Well, what if some outside group instead politely requested that each of us simply performed a one-line, simple calculation?  And that this had good cause that actually improved the value of what we did?  I'd consider that, wouldn't you?  This appraisal reform should, in my opinion, be approached with some consideration for the people performing the appraisals and the impact of what is being asked if them to do and their likely reactions to that and the amount of work required.

The tremendous advantage to licensed residential architects from a study like Michael's is that this could possibly provide compelling evidence that when someone hires a real architect to design a home, that by in large, this tends to add an additional value to a home. Period.  Sure, this will not always be the case, but you know what?  Neither is there any for-sure guarantee that having your home in any particular neighborhood will assure you of added value.  Appraisers and brokers have to work with overly-simplified rules of thumb from listed prices and sales prices for similar homes.  No guarantees.  Best judgement call as to what is similar in the mid and experience of the person conducting the study.  The point, I thought that you and Michael were trying to make was that when people hire a real architect, that in general, the value they receive from their expenditure on our fees may likely come back to them,and hopefully more, when they sell their home.  If we cannot convince the public of this, then I think we are going to have a difficult time of convincing them of anything.  And that is where we find ourselves today.

It is my belief that we cannot over-complicate this process, but pursue whatever path you believe will yield the best results.



-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------







Original Message:
Sent: 08-20-2012 15:13
From: Eric Rawlings
Subject: Scientific Proof that Residential Architects Are Worth It?

Rand,
You're never going to convince banks, appraisal boards, the Senate Housing Committee, Congress, and all the powers that be that we Architects should get an automatic 20% value boost. It's all about sales and individual performance at market. Just because someone worked at BMW and decided to start their own car company, they still have to prove themselves at market with their own products. Not all Architects are the same, not all Architectural solutions resonate as well at market, not all of our solutions make sense in the context of the area in which they are designed. We're really good at pleasing an end user client, but can we consistently create affordable products that resonate with the people? We have a lot to prove when it comes to that, seeing how we don't design very many spec houses. If I had to put my money on the line, I'd bet on the licensed Architect, but this doesn't mean they will automatically out perform the competition when it comes to value and what people are willing to pay. The modernism we all  tend to like isn't necessarily what the general public wants. We tend to please ourselves, not the general public. 

The philosophy of the appraiser is that land has indefinite use and improvements, like houses, are only temporary. Their attitude toward "improvements" is to provide a "replacement" value based on the configuration of the subject property using the materials, methods, and market value of recent comparable sales. This basic philosophy makes sense for existing, older buildings, but not for houses 10 years or younger that still have all of the original materials in tact, like roofing, that still comply with current codes, and are built and designed by companies still in business.

New(er) home values should be based on the comparable properties of the companies building and designing them. The market value of the land should be separate from the value of the improvements, so we can see what is gaining or losing value. The skyrocketing property values of the boom are unexplainable when you try to break down what gained value, the land or house? When you compare "comparable" properties, you'll see those at the bottom gaining value and those at the top losing value, yet they are supposed to be so similar that they are "comparable". Demystifying what is what begins to expose the fundamental problems with the system itself. It would be easy to implement on spec houses because they are products in every sense of the word, they make up over 80% of all new houses being built, and they instantly create sales histories. The only reason the overwhelming majority of spec house builders use the Walmart business model of mass producing the cheapest house possible to undercut the competition is because when you're sales are at the bottom, then you only have one way to go on the appraisal when your values are averaged out with your competition and that's up. If you're a schmuck like me and your spec houses sell for the most in the area, there's only one way to go on the appraisal when averaged against your competition and that's down.

The real trick is trying to get the highest sale without spending too much money and this is a skill not ALL Architects are good at. When you have to use the same kit of pieces and parts to create a more desirable house, then you have to rely on design alone. I have to argue that many Architects tend to spend A LOT more money to achieve better results. With my builders, we're spending a little more money to get much better results and it's still very tough competing with these guys. If we were all held to our own sales histories, then design would actually matter and the lousiest spec builders wouldn't be using our sales to justify more value for themselves while building the lowest quality buildings.

The only way we can have a significant influence over the housing industry is to design spec houses.The only way builders can afford for us to join in the game is for design to matter. When value is based on an average, design doesn't matter. We fix this and we open up a HUGE marketplace for Architects to prove their designs are more valuable. We have to prove this as individuals. We are not going to change a basic mentality of sales and value that has existed for thousands of years because Michael does a study. In fact, I'll bet Michael ends up seriously disappointed when seeing how our houses sell compared to the money our clients end up spending. The system is broken and this is what prevents us from being involved at a greater capacity. Banks aren't looking for a hypothetical replacement cost on their investments based on the average job everyone is doing. They're looking for the most likely value that particular investment will sell for and this is the fundamental difference between the appraiser's philosophy and the data the bank really wants. We need to sell that to the banks, not in terms of how to apply more value to OUR work, but how to prevent the majority of spec houses from being overvalued because one company does a really good job and their community of competitors are able to get dozens of loans based on one sale of a more successful competitor.



-------------------------------------------
Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
-------------------------------------------







Original Message:
Sent: 08-17-2012 08:59
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Eric, I am in agreement with your suggestion that appraisals of all types, including BPOs (Broker Price Opinions) and CMAs (Comparable Market Analyses) should have some identification of "Licensed Architect Designed" or not.  This could simply be accomplished by having a checkbox on the appraisal/BPO/CMA form that indicates something as simple as: "WAS THIS HOME DESIGNED BY AN ARCHITECT?  IF SO, ADD 20% TO THE TOTAL VALUATION."  If indeed, that is the added value someone like Michael discovers is the appropriate amount to add to a home for having been designed by an architect.  20% is my off the cuff guesstimate, as an architect doing this for about 37 years.  Under certain circumstances, it could be more; it could be less.  For instance, what would be the valuation of Falling Water today?  Architectural icons would be the exception to the rule. 

GOAL: CREATE A SINGLE LINE ITEM FORMULA:
It appears that what Michael is trying to do is to come up with a "one size fits all" equation and I respect and appreciate that. People will say that approach is too simplistic.  Well, I have seen line items on some appraiser's forms that say simplistic things like: "Add $50,000 for a stone front porch and stone steps."  If appraisals can be that simplistic, then let's go ahead and become part of the calculation with at least some added valuation factor.  That would be better the present situation for having a home designed by an architect, which is: zero.  Something, even an overly simplistic increased factor is better than nothing.

SOME ARCHITECTS AND OTHERS WILL CREATE STATIC:
Michael, you are going to encounter some resistance to your efforts.  Do not that that deter you.  All the residential architects in the AIA (and those also not in the AIA) appreciate what you are doing and thank you.  Even if they give you negative comments about being "simplistic", they will directly benefit from your Research and Development and they should be thanking you and helping you.  It is through scientific data gathering like yours that will result, hopefully, in making a nationwide improvement in how the public perceives the value of real architects and come to understand that our fee for designing their home will come back to them at resale time due to appraisal reforms brought about by people like you and Eric and others.  Please continue.  Fight the good fight.  And oh, of course there are other things that bring our fee back to them, such as: reduced monthly power bills, due to an architect's efforts to improve the building envelope's sealing and higher insulation levels, proper overhangs to control sun, proper choice of windows, doors, siding and other factors.  Then there are the aesthetic values that are intangible, but priceless, like properly orienting a home to a wonderful view, shielding private spaces from the street and opening those same private areas to the views, sensible organization, efficient space planning and capturing a client's lifestyle in the design, which an off-the-rack builder home simply cannot accomplish.

Some people will say: "but all architects are not the same.  Some don't create homes that have as saleable features as others, yadda, yadda."  Yeah, well, the same can be said of builders and others in the entire home creation, valuation and building cycle.  And the appraisers muddle through it all, don't they?  Making a mess of it generally, but they do forge ahead.  All we are trying to do is make just one adjustment in the method: that in general, having a competent, capable licensed architect design your home should result in a better sales price.  Is this a guarantee?  No.  Of course not.  Neither is being in a good neighborhood.  We have all seen exceptions to the rule.  What is being sought here is an improvement in the appraisal methods through the addition of JUST ONE LINE ITEM that adjusts a home's value upward due to the fact that a home was designed by a real architect.

GOAL OF MICHAEL'S STUDY: GETTING ONE LINE ITEM ADDED TO APPRAISALS AND BPOs AND CMAs: And I think that should be your goal, Michael:  you are trying to get just one line item added to an appraisal form.  And that will be enough to help us all.  Please do your study.  I suggest you begin by creating an Excel spreadsheet, copying verbatim a nationally accepted appraisal form.  Then, somewhere, down around the bottom of this, look where you can insert the new "Architect Designed Value Added" line item that pumps up the whole value by a factor that your study supports.  This new spreadsheet of yours + your data will hopefully result in a game-change for home appraisals. 

BPO/CMA/ REAL ESTATE BROKERS/INTERMEDIARY BPO SOLICITATION COMPANIES:
Note that you are not done, with just appraisals!  THERE ARE PROBABLY 4X MORE BPOs AND CMAs CONDUCTED BY REAL ESTATE BROKERS THAN THERE ARE OFFICIAL APPRAISALS.  Banks and other lenders that are foreclosing on homes are the ones who solicit for and pay real estate brokers to create BPOs and CMAs.  Why?  Because a real estate broker will do it for much less than appraiser.  Also, it is the real estate broker who has direct access to the MLS (Multiple Listing Service), which is where the data comes from to support Listing Prices and Sales Prices.  And due to the volume of foreclosures over the last several years (millions), banks had to find some alternate method of valuing their sudden glut of repossessed homes and other properties.  Therefore, they sought the assistance of real estate brokers.  Therefore, once you, Michael, hopefully with the AIA's help (and the assistance of other organizations as well, we hope) tackle the appraisal industry and get the Architect Value Added line item, there will need to be some sort of trickle-down effort to get this line item added to bank/financial institution BPO and CMA forms.  And here's the kicker: each form can be different for each institution.  Also, there are various intermediaries that act as work-brokers for the banks, like Clear Capital, who in turn go out and solicit real estate brokers to conduct the actual BPO study.  Then these intermediaries check the BPO, make sure it is as correct as possible, then they turn those BPOs over to the banks whom they represent.  Of course, they get a fee for brokering these BPO studies.  So, all these intermediary BPO solicitation companies will need to adjust their forms to add the Architect Value-Added line item as well.  And that could very well take the entire might of the AIA to convince them to do that.  This is a big job and it will not be done overnight. 

AIA TASK FORCE NEEDED
The AIA, with possibly you, Eric and Michael, heading a task force will need to tackle this.  It is too much for just a single individual.  Eric has been correctly ranting about this for at least a year and Mark Demerley assures me that he has been heard and that supposedly something is starting to happen within the AIA to begin correcting the appraisal process.  I hope so. 

And Eric, I would be happy to hear your talk, but my AIA dues took all my discretionary funds for events like this.  But thanks for the invitation.

Everyone: have a nice weekend. 

-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------

Oops.  I meant: "...in the mind and experience of the person conducting the study."

-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------







Original Message:
Sent: 08-21-2012 09:09
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Eric,
This is not my fight, so I am not going to try to convince anyone to do anything.  This is your battleground.  I was only trying to help you and Michael by suggesting a simple method that might possibly find its way onto appraisal spreadsheets and onto BPOs and CMAs (Broker Price Opinions, Comparative Market Analyses).  If you are going to demand, or even suggest, that appraisers and real estate brokers have to prepare a custom valuation for each and every different architect, assessing their individual track records on all of their homes they have designed (and where would that data be accessed, if it exists?), then I believe that you would be complicating the appraiser's task so far beyond the fee they receive for conducting the appraisal or BPO or CMA, that appraisers and real estate brokers would fight such a suggestion tooth and nail. 

Why?  Because they only get about $600 or so to create an appraisal.  And real estate brokers only get between $35 to $65 for a BPO or CMA.  It already takes them about 6 hours to prepare these evaluations, and it requires that they go to the subject property and take multiple photographs as well.  The point is that: if you are trying to compel the appraiser or broker to in addition to their already demanding task, to also have to conduct an additional evaluation and assessment of the added value of each and every different architect designing the subject properties, this would likely be viewed as an over-complication in the process from their viewpoint.  I believe that this process has to be simple.

What I had suggested was a simple, single additional line item: "Was this home designed by an architect?  If so, multiply the value of the home by ____% and add this to the total."  Anything more complicated than this is likely, in my opinion, to be met with intense resistance from the people who perform this work.  It is understood that this is an oversimplification.  Got that.  However, asking appraisers and brokers to double their work by trying to evaluate each and every one of us architects and perhaps a decades-long track record for each architect will not only be near impossible (as I mentioned, where would they even locate that data? or know where to look?), they will balk at the increase in their work for no additional compensation. 

Sort of like some outside entity coming to the AIA and demanding that all architects henceforth must add another 5 drawing sheets to each of our sets, detailing something or other that outside group felt was important.  How would we react to that?  Resistance, big time.  Well, what if some outside group instead politely requested that each of us simply performed a one-line, simple calculation?  And that this had good cause that actually improved the value of what we did?  I'd consider that, wouldn't you?  This appraisal reform should, in my opinion, be approached with some consideration for the people performing the appraisals and the impact of what is being asked if them to do and their likely reactions to that and the amount of work required.

The tremendous advantage to licensed residential architects from a study like Michael's is that this could possibly provide compelling evidence that when someone hires a real architect to design a home, that by in large, this tends to add an additional value to a home. Period.  Sure, this will not always be the case, but you know what?  Neither is there any for-sure guarantee that having your home in any particular neighborhood will assure you of added value.  Appraisers and brokers have to work with overly-simplified rules of thumb from listed prices and sales prices for similar homes.  No guarantees.  Best judgement call as to what is similar in the mid and experience of the person conducting the study.  The point, I thought that you and Michael were trying to make was that when people hire a real architect, that in general, the value they receive from their expenditure on our fees may likely come back to them,and hopefully more, when they sell their home.  If we cannot convince the public of this, then I think we are going to have a difficult time of convincing them of anything.  And that is where we find ourselves today.

It is my belief that we cannot over-complicate this process, but pursue whatever path you believe will yield the best results.



-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------







Original Message:
Sent: 08-20-2012 15:13
From: Eric Rawlings
Subject: Scientific Proof that Residential Architects Are Worth It?

Rand,
You're never going to convince banks, appraisal boards, the Senate Housing Committee, Congress, and all the powers that be that we Architects should get an automatic 20% value boost. It's all about sales and individual performance at market. Just because someone worked at BMW and decided to start their own car company, they still have to prove themselves at market with their own products. Not all Architects are the same, not all Architectural solutions resonate as well at market, not all of our solutions make sense in the context of the area in which they are designed. We're really good at pleasing an end user client, but can we consistently create affordable products that resonate with the people? We have a lot to prove when it comes to that, seeing how we don't design very many spec houses. If I had to put my money on the line, I'd bet on the licensed Architect, but this doesn't mean they will automatically out perform the competition when it comes to value and what people are willing to pay. The modernism we all  tend to like isn't necessarily what the general public wants. We tend to please ourselves, not the general public. 

The philosophy of the appraiser is that land has indefinite use and improvements, like houses, are only temporary. Their attitude toward "improvements" is to provide a "replacement" value based on the configuration of the subject property using the materials, methods, and market value of recent comparable sales. This basic philosophy makes sense for existing, older buildings, but not for houses 10 years or younger that still have all of the original materials in tact, like roofing, that still comply with current codes, and are built and designed by companies still in business.

New(er) home values should be based on the comparable properties of the companies building and designing them. The market value of the land should be separate from the value of the improvements, so we can see what is gaining or losing value. The skyrocketing property values of the boom are unexplainable when you try to break down what gained value, the land or house? When you compare "comparable" properties, you'll see those at the bottom gaining value and those at the top losing value, yet they are supposed to be so similar that they are "comparable". Demystifying what is what begins to expose the fundamental problems with the system itself. It would be easy to implement on spec houses because they are products in every sense of the word, they make up over 80% of all new houses being built, and they instantly create sales histories. The only reason the overwhelming majority of spec house builders use the Walmart business model of mass producing the cheapest house possible to undercut the competition is because when you're sales are at the bottom, then you only have one way to go on the appraisal when your values are averaged out with your competition and that's up. If you're a schmuck like me and your spec houses sell for the most in the area, there's only one way to go on the appraisal when averaged against your competition and that's down.

The real trick is trying to get the highest sale without spending too much money and this is a skill not ALL Architects are good at. When you have to use the same kit of pieces and parts to create a more desirable house, then you have to rely on design alone. I have to argue that many Architects tend to spend A LOT more money to achieve better results. With my builders, we're spending a little more money to get much better results and it's still very tough competing with these guys. If we were all held to our own sales histories, then design would actually matter and the lousiest spec builders wouldn't be using our sales to justify more value for themselves while building the lowest quality buildings.

The only way we can have a significant influence over the housing industry is to design spec houses.The only way builders can afford for us to join in the game is for design to matter. When value is based on an average, design doesn't matter. We fix this and we open up a HUGE marketplace for Architects to prove their designs are more valuable. We have to prove this as individuals. We are not going to change a basic mentality of sales and value that has existed for thousands of years because Michael does a study. In fact, I'll bet Michael ends up seriously disappointed when seeing how our houses sell compared to the money our clients end up spending. The system is broken and this is what prevents us from being involved at a greater capacity. Banks aren't looking for a hypothetical replacement cost on their investments based on the average job everyone is doing. They're looking for the most likely value that particular investment will sell for and this is the fundamental difference between the appraiser's philosophy and the data the bank really wants. We need to sell that to the banks, not in terms of how to apply more value to OUR work, but how to prevent the majority of spec houses from being overvalued because one company does a really good job and their community of competitors are able to get dozens of loans based on one sale of a more successful competitor.



-------------------------------------------
Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
-------------------------------------------







Original Message:
Sent: 08-17-2012 08:59
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Eric, I am in agreement with your suggestion that appraisals of all types, including BPOs (Broker Price Opinions) and CMAs (Comparable Market Analyses) should have some identification of "Licensed Architect Designed" or not.  This could simply be accomplished by having a checkbox on the appraisal/BPO/CMA form that indicates something as simple as: "WAS THIS HOME DESIGNED BY AN ARCHITECT?  IF SO, ADD 20% TO THE TOTAL VALUATION."  If indeed, that is the added value someone like Michael discovers is the appropriate amount to add to a home for having been designed by an architect.  20% is my off the cuff guesstimate, as an architect doing this for about 37 years.  Under certain circumstances, it could be more; it could be less.  For instance, what would be the valuation of Falling Water today?  Architectural icons would be the exception to the rule. 

GOAL: CREATE A SINGLE LINE ITEM FORMULA:
It appears that what Michael is trying to do is to come up with a "one size fits all" equation and I respect and appreciate that. People will say that approach is too simplistic.  Well, I have seen line items on some appraiser's forms that say simplistic things like: "Add $50,000 for a stone front porch and stone steps."  If appraisals can be that simplistic, then let's go ahead and become part of the calculation with at least some added valuation factor.  That would be better the present situation for having a home designed by an architect, which is: zero.  Something, even an overly simplistic increased factor is better than nothing.

SOME ARCHITECTS AND OTHERS WILL CREATE STATIC:
Michael, you are going to encounter some resistance to your efforts.  Do not that that deter you.  All the residential architects in the AIA (and those also not in the AIA) appreciate what you are doing and thank you.  Even if they give you negative comments about being "simplistic", they will directly benefit from your Research and Development and they should be thanking you and helping you.  It is through scientific data gathering like yours that will result, hopefully, in making a nationwide improvement in how the public perceives the value of real architects and come to understand that our fee for designing their home will come back to them at resale time due to appraisal reforms brought about by people like you and Eric and others.  Please continue.  Fight the good fight.  And oh, of course there are other things that bring our fee back to them, such as: reduced monthly power bills, due to an architect's efforts to improve the building envelope's sealing and higher insulation levels, proper overhangs to control sun, proper choice of windows, doors, siding and other factors.  Then there are the aesthetic values that are intangible, but priceless, like properly orienting a home to a wonderful view, shielding private spaces from the street and opening those same private areas to the views, sensible organization, efficient space planning and capturing a client's lifestyle in the design, which an off-the-rack builder home simply cannot accomplish.

Some people will say: "but all architects are not the same.  Some don't create homes that have as saleable features as others, yadda, yadda."  Yeah, well, the same can be said of builders and others in the entire home creation, valuation and building cycle.  And the appraisers muddle through it all, don't they?  Making a mess of it generally, but they do forge ahead.  All we are trying to do is make just one adjustment in the method: that in general, having a competent, capable licensed architect design your home should result in a better sales price.  Is this a guarantee?  No.  Of course not.  Neither is being in a good neighborhood.  We have all seen exceptions to the rule.  What is being sought here is an improvement in the appraisal methods through the addition of JUST ONE LINE ITEM that adjusts a home's value upward due to the fact that a home was designed by a real architect.

GOAL OF MICHAEL'S STUDY: GETTING ONE LINE ITEM ADDED TO APPRAISALS AND BPOs AND CMAs: And I think that should be your goal, Michael:  you are trying to get just one line item added to an appraisal form.  And that will be enough to help us all.  Please do your study.  I suggest you begin by creating an Excel spreadsheet, copying verbatim a nationally accepted appraisal form.  Then, somewhere, down around the bottom of this, look where you can insert the new "Architect Designed Value Added" line item that pumps up the whole value by a factor that your study supports.  This new spreadsheet of yours + your data will hopefully result in a game-change for home appraisals. 

BPO/CMA/ REAL ESTATE BROKERS/INTERMEDIARY BPO SOLICITATION COMPANIES:
Note that you are not done, with just appraisals!  THERE ARE PROBABLY 4X MORE BPOs AND CMAs CONDUCTED BY REAL ESTATE BROKERS THAN THERE ARE OFFICIAL APPRAISALS.  Banks and other lenders that are foreclosing on homes are the ones who solicit for and pay real estate brokers to create BPOs and CMAs.  Why?  Because a real estate broker will do it for much less than appraiser.  Also, it is the real estate broker who has direct access to the MLS (Multiple Listing Service), which is where the data comes from to support Listing Prices and Sales Prices.  And due to the volume of foreclosures over the last several years (millions), banks had to find some alternate method of valuing their sudden glut of repossessed homes and other properties.  Therefore, they sought the assistance of real estate brokers.  Therefore, once you, Michael, hopefully with the AIA's help (and the assistance of other organizations as well, we hope) tackle the appraisal industry and get the Architect Value Added line item, there will need to be some sort of trickle-down effort to get this line item added to bank/financial institution BPO and CMA forms.  And here's the kicker: each form can be different for each institution.  Also, there are various intermediaries that act as work-brokers for the banks, like Clear Capital, who in turn go out and solicit real estate brokers to conduct the actual BPO study.  Then these intermediaries check the BPO, make sure it is as correct as possible, then they turn those BPOs over to the banks whom they represent.  Of course, they get a fee for brokering these BPO studies.  So, all these intermediary BPO solicitation companies will need to adjust their forms to add the Architect Value-Added line item as well.  And that could very well take the entire might of the AIA to convince them to do that.  This is a big job and it will not be done overnight. 

AIA TASK FORCE NEEDED
The AIA, with possibly you, Eric and Michael, heading a task force will need to tackle this.  It is too much for just a single individual.  Eric has been correctly ranting about this for at least a year and Mark Demerley assures me that he has been heard and that supposedly something is starting to happen within the AIA to begin correcting the appraisal process.  I hope so. 

And Eric, I would be happy to hear your talk, but my AIA dues took all my discretionary funds for events like this.  But thanks for the invitation.

Everyone: have a nice weekend. 

-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------

This is a great and nobel discussion.
But it seams as hard as convincing my client they have to have MY  mitered glass corner on the Georgian house that have me to design.
How does one reconcile the cost of the intangibles that can be huge?

The land variance. when it was bought? Some land is free, other lots have been owned for many years, some is new purchase.
The builders P&O, that can very 10% of cost or more.
The architects Fee, 3% 8% 12%, ok I am dreaming.
The landscape cost,  whether it has a Landscape Architect services factored or not
The Interior Designers cost plus anything they nail to the wall that will go down as construction but not part of The contractors cost. 
The hard cost of the house, We have construction cost the go from $175 to $600 per heated foot. I would argue all in good taste.
One would have to have the schedule of values, and add to it all the outside cost that are not included in the schedule to make the true value of the home. 

With all these cost included, one could have a 30% cost burden for all this good taste over the spec house next door.
I forgot the 6% realtor fee added to the value for selling all this good taste.

It all makes me tired, I will just go back and try to sell the  value of my mitered glass Georgian window.





-------------------------------------------
Donald Duffy AIA
Don Duffy Architecture
Charlotte NC
-------------------------------------------







Original Message:
Sent: 08-21-2012 09:09
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Eric,
This is not my fight, so I am not going to try to convince anyone to do anything.  This is your battleground.  I was only trying to help you and Michael by suggesting a simple method that might possibly find its way onto appraisal spreadsheets and onto BPOs and CMAs (Broker Price Opinions, Comparative Market Analyses).  If you are going to demand, or even suggest, that appraisers and real estate brokers have to prepare a custom valuation for each and every different architect, assessing their individual track records on all of their homes they have designed (and where would that data be accessed, if it exists?), then I believe that you would be complicating the appraiser's task so far beyond the fee they receive for conducting the appraisal or BPO or CMA, that appraisers and real estate brokers would fight such a suggestion tooth and nail. 

Why?  Because they only get about $600 or so to create an appraisal.  And real estate brokers only get between $35 to $65 for a BPO or CMA.  It already takes them about 6 hours to prepare these evaluations, and it requires that they go to the subject property and take multiple photographs as well.  The point is that: if you are trying to compel the appraiser or broker to in addition to their already demanding task, to also have to conduct an additional evaluation and assessment of the added value of each and every different architect designing the subject properties, this would likely be viewed as an over-complication in the process from their viewpoint.  I believe that this process has to be simple.

What I had suggested was a simple, single additional line item: "Was this home designed by an architect?  If so, multiply the value of the home by ____% and add this to the total."  Anything more complicated than this is likely, in my opinion, to be met with intense resistance from the people who perform this work.  It is understood that this is an oversimplification.  Got that.  However, asking appraisers and brokers to double their work by trying to evaluate each and every one of us architects and perhaps a decades-long track record for each architect will not only be near impossible (as I mentioned, where would they even locate that data? or know where to look?), they will balk at the increase in their work for no additional compensation. 

Sort of like some outside entity coming to the AIA and demanding that all architects henceforth must add another 5 drawing sheets to each of our sets, detailing something or other that outside group felt was important.  How would we react to that?  Resistance, big time.  Well, what if some outside group instead politely requested that each of us simply performed a one-line, simple calculation?  And that this had good cause that actually improved the value of what we did?  I'd consider that, wouldn't you?  This appraisal reform should, in my opinion, be approached with some consideration for the people performing the appraisals and the impact of what is being asked if them to do and their likely reactions to that and the amount of work required.

The tremendous advantage to licensed residential architects from a study like Michael's is that this could possibly provide compelling evidence that when someone hires a real architect to design a home, that by in large, this tends to add an additional value to a home. Period.  Sure, this will not always be the case, but you know what?  Neither is there any for-sure guarantee that having your home in any particular neighborhood will assure you of added value.  Appraisers and brokers have to work with overly-simplified rules of thumb from listed prices and sales prices for similar homes.  No guarantees.  Best judgement call as to what is similar in the mid and experience of the person conducting the study.  The point, I thought that you and Michael were trying to make was that when people hire a real architect, that in general, the value they receive from their expenditure on our fees may likely come back to them,and hopefully more, when they sell their home.  If we cannot convince the public of this, then I think we are going to have a difficult time of convincing them of anything.  And that is where we find ourselves today.

It is my belief that we cannot over-complicate this process, but pursue whatever path you believe will yield the best results.



-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------







Original Message:
Sent: 08-20-2012 15:13
From: Eric Rawlings
Subject: Scientific Proof that Residential Architects Are Worth It?

Rand,
You're never going to convince banks, appraisal boards, the Senate Housing Committee, Congress, and all the powers that be that we Architects should get an automatic 20% value boost. It's all about sales and individual performance at market. Just because someone worked at BMW and decided to start their own car company, they still have to prove themselves at market with their own products. Not all Architects are the same, not all Architectural solutions resonate as well at market, not all of our solutions make sense in the context of the area in which they are designed. We're really good at pleasing an end user client, but can we consistently create affordable products that resonate with the people? We have a lot to prove when it comes to that, seeing how we don't design very many spec houses. If I had to put my money on the line, I'd bet on the licensed Architect, but this doesn't mean they will automatically out perform the competition when it comes to value and what people are willing to pay. The modernism we all  tend to like isn't necessarily what the general public wants. We tend to please ourselves, not the general public. 

The philosophy of the appraiser is that land has indefinite use and improvements, like houses, are only temporary. Their attitude toward "improvements" is to provide a "replacement" value based on the configuration of the subject property using the materials, methods, and market value of recent comparable sales. This basic philosophy makes sense for existing, older buildings, but not for houses 10 years or younger that still have all of the original materials in tact, like roofing, that still comply with current codes, and are built and designed by companies still in business.

New(er) home values should be based on the comparable properties of the companies building and designing them. The market value of the land should be separate from the value of the improvements, so we can see what is gaining or losing value. The skyrocketing property values of the boom are unexplainable when you try to break down what gained value, the land or house? When you compare "comparable" properties, you'll see those at the bottom gaining value and those at the top losing value, yet they are supposed to be so similar that they are "comparable". Demystifying what is what begins to expose the fundamental problems with the system itself. It would be easy to implement on spec houses because they are products in every sense of the word, they make up over 80% of all new houses being built, and they instantly create sales histories. The only reason the overwhelming majority of spec house builders use the Walmart business model of mass producing the cheapest house possible to undercut the competition is because when you're sales are at the bottom, then you only have one way to go on the appraisal when your values are averaged out with your competition and that's up. If you're a schmuck like me and your spec houses sell for the most in the area, there's only one way to go on the appraisal when averaged against your competition and that's down.

The real trick is trying to get the highest sale without spending too much money and this is a skill not ALL Architects are good at. When you have to use the same kit of pieces and parts to create a more desirable house, then you have to rely on design alone. I have to argue that many Architects tend to spend A LOT more money to achieve better results. With my builders, we're spending a little more money to get much better results and it's still very tough competing with these guys. If we were all held to our own sales histories, then design would actually matter and the lousiest spec builders wouldn't be using our sales to justify more value for themselves while building the lowest quality buildings.

The only way we can have a significant influence over the housing industry is to design spec houses.The only way builders can afford for us to join in the game is for design to matter. When value is based on an average, design doesn't matter. We fix this and we open up a HUGE marketplace for Architects to prove their designs are more valuable. We have to prove this as individuals. We are not going to change a basic mentality of sales and value that has existed for thousands of years because Michael does a study. In fact, I'll bet Michael ends up seriously disappointed when seeing how our houses sell compared to the money our clients end up spending. The system is broken and this is what prevents us from being involved at a greater capacity. Banks aren't looking for a hypothetical replacement cost on their investments based on the average job everyone is doing. They're looking for the most likely value that particular investment will sell for and this is the fundamental difference between the appraiser's philosophy and the data the bank really wants. We need to sell that to the banks, not in terms of how to apply more value to OUR work, but how to prevent the majority of spec houses from being overvalued because one company does a really good job and their community of competitors are able to get dozens of loans based on one sale of a more successful competitor.



-------------------------------------------
Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
-------------------------------------------







Original Message:
Sent: 08-17-2012 08:59
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Eric, I am in agreement with your suggestion that appraisals of all types, including BPOs (Broker Price Opinions) and CMAs (Comparable Market Analyses) should have some identification of "Licensed Architect Designed" or not.  This could simply be accomplished by having a checkbox on the appraisal/BPO/CMA form that indicates something as simple as: "WAS THIS HOME DESIGNED BY AN ARCHITECT?  IF SO, ADD 20% TO THE TOTAL VALUATION."  If indeed, that is the added value someone like Michael discovers is the appropriate amount to add to a home for having been designed by an architect.  20% is my off the cuff guesstimate, as an architect doing this for about 37 years.  Under certain circumstances, it could be more; it could be less.  For instance, what would be the valuation of Falling Water today?  Architectural icons would be the exception to the rule. 

GOAL: CREATE A SINGLE LINE ITEM FORMULA:
It appears that what Michael is trying to do is to come up with a "one size fits all" equation and I respect and appreciate that. People will say that approach is too simplistic.  Well, I have seen line items on some appraiser's forms that say simplistic things like: "Add $50,000 for a stone front porch and stone steps."  If appraisals can be that simplistic, then let's go ahead and become part of the calculation with at least some added valuation factor.  That would be better the present situation for having a home designed by an architect, which is: zero.  Something, even an overly simplistic increased factor is better than nothing.

SOME ARCHITECTS AND OTHERS WILL CREATE STATIC:
Michael, you are going to encounter some resistance to your efforts.  Do not that that deter you.  All the residential architects in the AIA (and those also not in the AIA) appreciate what you are doing and thank you.  Even if they give you negative comments about being "simplistic", they will directly benefit from your Research and Development and they should be thanking you and helping you.  It is through scientific data gathering like yours that will result, hopefully, in making a nationwide improvement in how the public perceives the value of real architects and come to understand that our fee for designing their home will come back to them at resale time due to appraisal reforms brought about by people like you and Eric and others.  Please continue.  Fight the good fight.  And oh, of course there are other things that bring our fee back to them, such as: reduced monthly power bills, due to an architect's efforts to improve the building envelope's sealing and higher insulation levels, proper overhangs to control sun, proper choice of windows, doors, siding and other factors.  Then there are the aesthetic values that are intangible, but priceless, like properly orienting a home to a wonderful view, shielding private spaces from the street and opening those same private areas to the views, sensible organization, efficient space planning and capturing a client's lifestyle in the design, which an off-the-rack builder home simply cannot accomplish.

Some people will say: "but all architects are not the same.  Some don't create homes that have as saleable features as others, yadda, yadda."  Yeah, well, the same can be said of builders and others in the entire home creation, valuation and building cycle.  And the appraisers muddle through it all, don't they?  Making a mess of it generally, but they do forge ahead.  All we are trying to do is make just one adjustment in the method: that in general, having a competent, capable licensed architect design your home should result in a better sales price.  Is this a guarantee?  No.  Of course not.  Neither is being in a good neighborhood.  We have all seen exceptions to the rule.  What is being sought here is an improvement in the appraisal methods through the addition of JUST ONE LINE ITEM that adjusts a home's value upward due to the fact that a home was designed by a real architect.

GOAL OF MICHAEL'S STUDY: GETTING ONE LINE ITEM ADDED TO APPRAISALS AND BPOs AND CMAs: And I think that should be your goal, Michael:  you are trying to get just one line item added to an appraisal form.  And that will be enough to help us all.  Please do your study.  I suggest you begin by creating an Excel spreadsheet, copying verbatim a nationally accepted appraisal form.  Then, somewhere, down around the bottom of this, look where you can insert the new "Architect Designed Value Added" line item that pumps up the whole value by a factor that your study supports.  This new spreadsheet of yours + your data will hopefully result in a game-change for home appraisals. 

BPO/CMA/ REAL ESTATE BROKERS/INTERMEDIARY BPO SOLICITATION COMPANIES:
Note that you are not done, with just appraisals!  THERE ARE PROBABLY 4X MORE BPOs AND CMAs CONDUCTED BY REAL ESTATE BROKERS THAN THERE ARE OFFICIAL APPRAISALS.  Banks and other lenders that are foreclosing on homes are the ones who solicit for and pay real estate brokers to create BPOs and CMAs.  Why?  Because a real estate broker will do it for much less than appraiser.  Also, it is the real estate broker who has direct access to the MLS (Multiple Listing Service), which is where the data comes from to support Listing Prices and Sales Prices.  And due to the volume of foreclosures over the last several years (millions), banks had to find some alternate method of valuing their sudden glut of repossessed homes and other properties.  Therefore, they sought the assistance of real estate brokers.  Therefore, once you, Michael, hopefully with the AIA's help (and the assistance of other organizations as well, we hope) tackle the appraisal industry and get the Architect Value Added line item, there will need to be some sort of trickle-down effort to get this line item added to bank/financial institution BPO and CMA forms.  And here's the kicker: each form can be different for each institution.  Also, there are various intermediaries that act as work-brokers for the banks, like Clear Capital, who in turn go out and solicit real estate brokers to conduct the actual BPO study.  Then these intermediaries check the BPO, make sure it is as correct as possible, then they turn those BPOs over to the banks whom they represent.  Of course, they get a fee for brokering these BPO studies.  So, all these intermediary BPO solicitation companies will need to adjust their forms to add the Architect Value-Added line item as well.  And that could very well take the entire might of the AIA to convince them to do that.  This is a big job and it will not be done overnight. 

AIA TASK FORCE NEEDED
The AIA, with possibly you, Eric and Michael, heading a task force will need to tackle this.  It is too much for just a single individual.  Eric has been correctly ranting about this for at least a year and Mark Demerley assures me that he has been heard and that supposedly something is starting to happen within the AIA to begin correcting the appraisal process.  I hope so. 

And Eric, I would be happy to hear your talk, but my AIA dues took all my discretionary funds for events like this.  But thanks for the invitation.

Everyone: have a nice weekend. 

-------------------------------------------
Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
-------------------------------------------

I can think of 6 custom houses of mine that have sold once or twice.

Here are 2 examples:
House 1: under roof  11,164 under roof sf ,  7775 heated sf 
First sale: 2007, $304 under roof sf, $438 htd sf, lot value $850K is included in the sale.
Second Sale: 2011, under roof $181 under roof sf, $261 htd sf

House 2: 3756 under roof sf ,  3672 heated sf
Only one sale, $314 under roof sf, $321 htd sf, lot value $420K

This exercise is a worthy cause for spread sheet minded person. Under roof cost needs to be factored in as does lot or land cost. The hard part is how would these cost rank in the local market of non architected houses.

Land will definitely skew the value of the home. I wish we sold houses like cars; cubic feet, manufacture and car features. There used to be a time when cubic feet was a factor.

It may well be some architect's homes will sell for more on name alone in any given market. Here Charlotte, some houses are listed and use the architects name in the sells brochure. The realestate community must think  this adds value at some level. They also list home designers that have built a brand in the market place.

-------------------------------------------
Donald Duffy AIA
Don Duffy Architecture
Charlotte NC
-------------------------------------------







Original Message:
Sent: 08-15-2012 07:53
From: Rand Soellner
Subject: Scientific Proof that Residential Architects Are Worth It?

Good Morning Michael,

I have seen several responses to your request for data, none particularly helpful to you.

Hey CRAN folks, here is a soldier (Michael) trying to help us by assimilating data to help us prove that what we design is worth more!  Let's give him some data, okay?

I think that any residential architect should be able to quote you how much per square foot their homes sold for.  That, in my mind, is the great equalizer, and common denominator.  For instance, in an up market, one of the homes I designed went for $833/HSF (Heated Square Feet).  It was very custom, inside and out and had a view of a large, rare, high-mountain lake in a community of high-end homes. Lots of stone, heavy timber, large windows, custom finishes.  I had another go for $416/HSF, also in a very nice community, but the view was not as commanding.  Those were back in the Boom.  After the bust, I had one of my mid-range homes go for $260.31 in a distressed situation, which means this is an under-valued position that will likely correct itself in future resales of that home.  For instance, that home appraised for $704.46/HSF back in the Boom. 

You will need to carefully review the parameters that today's appraisers use and put that into a spreadsheet format, then when you see new characteristics that architects add to a project, such as improved aesthetics or improved functionality or improved energy efficiency, add those characteristics to a new and improved Proposed appraisal method that you and others in this forum might wish to consider offering to a national appraisal organization along with a national association of banks, to help them correct their antiquated appraisal methods that are not presently incorporating characteristics that architects' designs add to a home, increasing its value.

There are others in this forum that are much more aligned to this effort than I am and I hope that they will give you some actual math data about $/HSF that you can use.  Of course, you will need some follow-up with such offerers of data, to quiz them as to what features those homes had, their locations and other parameters, to help you quantify the value that an architect brings to the equation.

I applaud your quest and hope that us architects out here actually designing homes that we believe are more valuable than what builders and others are producing will furnish you with the data you need to help us Document this. 

I understand that without such documentation that your search will be fruitless and so will the AIA's chance of changing appraisal methods.  You are trying to do it the right way: not with rhetoric, but with actual hard numbers, comparing architect-designed home prices (per HSF) against non-architect created homes (per HSF).  When well-intentioned architects provide you with numbers (like I just did above), such offerings will of course be lacking in detail.  You will need that detail information (location, features, etc) to flush out your study.  What you are trying to do is worthy of a Master's or Doctoral Thesis.  You are trying to improve today's housing appraisal methods.  I believe this is possible, if only those of us who are designing these homes will give you the information you need.  Therefore, whenever anyone offers you such information, I suggest that you send them an e-mail, requesting more detailed information, so that the numbers have relevance to your developing Master Housing Appraisal Spreadsheet.

By the way, my wife is real estate broker and does CMAs (Comparative Market Analyses) for banks in our area, and she also sells them.  I have compared what she does to full-blown appraisals and don't see much difference in the methods.  A lot of the value of the house comes down to what the comparable sales went for, having comparable square footages and features (to the best of the appraising professional's knowledge).  And here is what we are all trying to influence: the appraising individual's knowledge. 

If people like Michael here can get the information from us he needs to produce an influential document Proving that most architect-design homes do in fact sell for more, this might lead to a line item on the standard appraisal methods sheets that state something like:
WAS THIS HOME DESIGNED BY A LICENSED ARCHITECT?  IF SO, ADD 20% TO THE OVERALL VALUE.
I think that is probably what we are all after, isn't it?

So: Let's all help Michael!  Send him for sale values on an per HSF basis (or whatever basis he needs it).  Thank you, one and all.


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Rand Soellner AIA
Architect/Owner/Principal
Rand Soellner Architect
Cashiers NC
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