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comp adjustment

Discussion in 'Commercial/Industrial Appraisals' started by aalderman1, Oct 19, 2011.

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  1. aalderman1

    aalderman1 Sophomore Member

    0
    May 10, 2010
    Professional Status:
    Certified General Appraiser
    State:
    North Carolina
    I've confirmed a sale (two months old) of an older, brick warehouse not far from my subject; however, it has a few quirks.

    1. It sold to a church, which brings up HBU questions since the subject is still a brick, owner-occupied building.

    2. The seller took a second lein on the property for a portion of the sales prices.

    3. The seller 'gave' $50,000 or so dollars of the sales price to the church for a tax deduction.

    The amount actually paid, the second lein, and the charitable donation equal the deed stamps. According to the buyer, the final (combined) price was set by the appraisal.

    Should I throw this out or make some Conditions of Sales adjustments?

    Advice is appreciated. Ridicule is endured. Wisdom is never rejected.

    Peace.
     
  2. Metamorphic

    Metamorphic Senior Member
    Gold Supporting Member

    30
    Mar 15, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    I had a similar situation with a house. I left it in as an "extra" comp just for curiosities sake. I wanted to see where it fit in when adjusted like the rest of the comps.

    The problem with this kind of sale is that the only way you'll know if a Conditions of Sale adjustment is necessary is by comparing it to the other adjusted comps. If its is necessary, the size of the adjustment will be the difference between the existing adjusted price and the predominant value of the other comps. I think for purposes of keeping the IRS off everybody's back, the net (purchase price plus donation) will be close to the MV.

    So really the comp doesn't tell you much about the MV of your subject except what the buyer's and seller's agents or appraisers though they could get past the IRS as being a reasonable MV. It does have value as an appraisal curiosity or learning opportunity.
     
  3. Pittsburgh Pete

    Pittsburgh Pete Elite Member

    23
    May 6, 2008
    Professional Status:
    Certified General Appraiser
    State:
    Pennsylvania
    What does the seller have to say? His input and take on the transaction could be helpful.

    Was the property offered for sale? At what price?

    Lots of interesting questions--bottom line I might use the sale but would refrain from hanging my hat (or anything else) on it.

    Good luck.
     
  4. aalderman1

    aalderman1 Sophomore Member

    0
    May 10, 2010
    Professional Status:
    Certified General Appraiser
    State:
    North Carolina
    Thanks for the feedback guys. I cannot get a hold of the seller. If I use the sale, it will be 'in support' of more traditional market transactions.
     
  5. PL1957

    PL1957 Senior Member

    6
    Jul 19, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Illinois
    Have you tried the buyer? His perceptions are probably more important thatn the sellers.
     
  6. aalderman1

    aalderman1 Sophomore Member

    0
    May 10, 2010
    Professional Status:
    Certified General Appraiser
    State:
    North Carolina
    The information I have is from the buyer.
     
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