Recently I was contacted by an Underwriter about a comment made on a report I did. It's unusual for an Underwriter to contact an appraiser directly, but, Hey I don't mind. What I am referring to is a comment about an Environmental Concern within a subject property's market area. More specifically, a southwestern phenomenon known as Fissures. They can start as a small little ripple in the desert crust and with a little bit of rain can trigger an earth fissure to tear open a crack large enough to swallow a car or part of a house, and can damage foundations, driveways, and other structures.
Fissures are cracks in the ground that develop when groundwater is pumped faster than it can be replenished. A rapid drop in the water table dries out surrounding land, causing tension cracks that rise to the surface. If a fissure occurs in the desert and there's no one living on it, it's not a problem. It's when you build roads, homes, electrical lines and pipelines near them where you have the risk of them opening to a rainstorm and causing damage to the infrastructure. The county requires all structures to be built at least 50 feet away from fissures. Fissures can be filled in but will never go away.
Fissures are found mostly in the central and southern part of Arizona (Maricopa, Pinal, Pima Counties). Pinal County, one of the nation's fastest growing counties, is also home to three-fourths of the state's known fissures.
The additional comment I included in the report did not specify any fissures on or near the subject property, but did specify the subject's market area was known to have fissures present. Although no adjustments were made for the final value (since no fissures or evidence of fissures were noted at the time of inspection of the subject property and no disclosures were made by the seller or realtor in the sales contract) it still was a shock to the Underwriter that I would include a comment about fissures. Also, my research of the comparables used in the report did not reveal any information or disclosures about fissures on or near them,which I found quite disturbing. The deal did go through.
Just another reason why appraisers need a copy of the complete sales contract for the report and why realtors need to include necessary information in their listings.
Buyers,Sellers and Realtors, repesenting buyers or sellers, should be aware and disclose any information about fissures. The seller is required by Arizona law to disclose such information. If the seller is unaware of any fissure problems, do your research and check the Arizona Geological Survey maps or hire a geotechnical engineer to survey the land before buying or selling. There have been several news articles over the past few of years of homeowners sueing sellers and realtors for non-disclosure of information in Arizona. I'm pretty sure it happens in other parts of the Country also, but perhaps not for the same reasons.
The Arizona Geological Survey is undertaking a task to map all known fissures and fissure areas in the State of Arizona. According to Michael Conway, Ph.D., Section Chief, Arizona Geological Survey, Tucson, mapping of 22 priority areas throughout Cochise, Maricopa, Pima, and Pinal Counties in Arizona will take about 3 to 5 years. Their web site is: www.azgs.az.gov . They currently have preliminary fissure maps for Maricopa and Pinal Counties showing fissures in the areas of: North Valley (Phoenix & Scottsdale), West Valley (Goodyear & Litchfield Park), East and SouthEast Valley (Apache Junction, Queen Creek, Chandler Heights, Santan Heights), North/NorthEast Pinal County (Queen Creek, Santan & Chandler Heights).
Mortgage Brokers, Lenders, Loan Officers should be concerned that the appraisal reports they order are being done completely, with research and information necessary and required, to arrive at an accurate value of the subject property and is providing a clear understanding of why and how the final value is what it is. Perhaps fissures don't seem to be much of a concern, but I have lived in Arizona all my life (over 50 years) and I know with the growth increase in population, development and city sprawl, the demand for water (especially ground water) is always on the increase. Another recent article about the building of a "World Class Water Theme Park" in the central/east valley, which will require a tremendous amout of water, will definitely have an impact on the ground water, and increase the presence of fissures and environmental concerns which will effect real estate values.
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