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Help me be sure I've got my head on straight

Discussion in 'General Appraisal Discussion' started by jlabauve, Oct 17, 2010.

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  1. jlabauve

    jlabauve Member

    0
    Feb 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Louisiana
    I received an appraisal request from a local attorney, and I was recommended by the judge in this case because I have testified before her numerous times.

    After reading the particulars of this property, I believe that it will be almost impossible, and maybe completely impossible to perform a "market value" valuation. I am looking for any and all feedback from you guys before I respond to the attorney. I am 99.999% sure I am not going to accept this assignment, unless you guys can educate me that my thinking is incorrect, AND I get a gigantic fee.

    The facts:
    1) property is a frame/pier structure which was purchased and moved onto a third party's land, then extensively remodelled. Also, they made some site improvements on the other party's land, such as a barn, horse arena and fencing. Just to make it clear - they do not own the land that these improvements sit on.

    2) Now they are getting a divorce, and one party apparently has a "market value" appraisal, which I have not seen (by choice). The attorney states that the sales analyzed in this appraisal are properties with land and the appraisal includes a land value !?!?!!

    3) The attorney wants a "market value" appraisal.

    4) Research in my local MLS (going back to the beginning of time) shows a total of 4 sales of houses to be moved. Three of these transactions took place from 1989-1991, and one in 1999. However MLS data does not contain information regarding the condition or photos or vendor/vendee of any of these sales, and the Realtors don't even remember them. To my knowledge, there is no other central place to locate sales of this type, although maybe house movers might be able to point me toward some sales.

    My thoughts about this assignment:
    1) Just to state the obvious, you can't just deduct a site value from similar sales to obtain market value. You would need verified transactions of arm's length sales of properties which were sold "to be moved."

    2) The house is not real estate, it is chattel, since it is not legally tied to its own parcel of land.

    3) Same thing with the site improvements (barn, lighting, fencing, arena). There may be some salvage value to these, but I've got no idea how to arrive at that number. Or they may have some value to the property owner. But in my mind, only having one potential purchaser screws up the whole idea of market value. Question: can you derive a market value is there if only one potential purchaser??

    4) I suppose I could do a depreciated cost approach, but that ain't market value.

    OK - go!
     
  2. DTB

    DTB Elite Member

    65
    Jun 11, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    I would begin with similar sales with land, back out the land cost, moving costs and the PITA/ EI factor to get in the ballpark.

    You will be closer than the other appraisal and I doubt your value could be disproven. :unsure:

    Good luck.
     
  3. TEL2002

    TEL2002 Elite Member

    2
    Jan 16, 2002
    Professional Status:
    Retired Appraiser
    State:
    Louisiana
    Is there a long term lease for the land?

    I assume the amenities are not movable, is there an agreement with the landowner to pay for those amenities when the couple leaves.

    This is one screwed up mess, why do people put themselves in such lousy situations?

    I think all you are going to have is the value of the movable buildings (less the cost of moving, new foundation/piers, setup, and EP).

    Once I checked into having a house I own in IA sold and moved. Small 832 sqft...but 10 miles from anything over gravel roads. I could only find one person interested and he wanted to knock the value of the building down about $45000 for his expenses & work.

    Oh yeah, make sure your fee is a healthy one, you will earn it. But I agree with DTB, who's gonna call you wrong? I think that judge just handed you future business for a long time...turn it down and you may have burned a potentially very productive bridge in front of you.
     
    Last edited: Oct 17, 2010
  4. jlabauve

    jlabauve Member

    0
    Feb 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Louisiana
    No lease on the land. Of course it's the husband's or wife's father's land. No agreement on what would happen if the couple left.
     
  5. jlabauve

    jlabauve Member

    0
    Feb 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Louisiana

    Obviously they are "in love" when they make these decisions, and it's gonna last forever and ever!!! lol I'm sure no one on this forum has ever made an error in judgement when they were "in love".
     
  6. Doug DeMars

    Doug DeMars Senior Member

    2
    Mar 20, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Better be clear what you're appraising. The movable house? Who cares about the barn or other site improvements...those belong with the land.

    There may be a lease-hold value to the land...but that's a separate valuation issue and personally, I'd be calling someone who is more familiar than I about such issues.

    If value has been asked for the "movable" pier-frame structure. You may be able to find some similar info with "similar" manufactured homes...then apply a significant discount for not being new. IMO, the cost to move and intall the structure is a separate issue but could be extracted...if then also using a manufactured home re-sale in the market and deducting its land value and cost of its site improvements (e.g. foundation, utility hook-up, etc...)

    Sounds like a lot of work...make sure you get paid properly.
     
  7. Denis DeSaix

    Denis DeSaix Elite Member

    425
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    The subject of the valuation problem, then, is the house and the other improvements?

    I doubt if the ancillary buildings have much value and are worth re-locating.
    Sounds like the site improvements are (literally) sunk-costs to support the improvements and have no reversionary value to the owners of the improvements.

    Maybe it is?

    Isn't this similar to a special-use subject?
    The cost approach may be the only reasonable way market participants would value such a property.
    If you found several, similar-type properties (land and improvements), extracted out the land values, the contributory value of the improvements should be similar, no?
    Then depreciate the subject and see how close the values match. Be sure to consider such things as EI and (as TEL2002 points out), moving costs (which should have its own EI, if you ask me).

    Finally, you may be able to get the court to agree that value should be expressed as a range or benchmark (I'd try to get agreement to a range).

    The court definitely needs help in establishing a value.
    This problem is very complicated.
    Lack of similar-data and using improvement-extraction values reduces the confidence level of any point-value conclusion (hence, the range of value).
    You can look at the older sales and try to determine if there was any "stigma" attached to the fact that the improvement was moved. My guess there isn't (if anything, the new foundation should be compliant with current building requirements and structural integrity of the improvement will probably be evaluated to ensure it can withstand the stress of the move and the placement on the new foundation; I'd make this an EA if not the case).

    I'd outline the problem (as I saw it) and then provide my methodology for solving it. I'd want to get the court to agree that my process was acceptable and consistent with the intended use of the results.

    I also agree with TEL; charge appropriately for the assignment!!!

    Good luck!
     
  8. hglenbetts

    hglenbetts Senior Member

    2
    Dec 3, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Michigan
    I'm no lawyer, but I did watch all the episodes of "Alley McBeal".

    Without a lease, or some other written agreement, might not the law say that the improvements to the land become the property of the land owner?? This could be a big ownership rights problem for the non related spouse. He/She may have no ownership rights in the improvements for you to appraise, if the land owner argues ownership.

    Then, you're appraising that spouse's loss of "investment" in the improvements, as they wouldn't have the right to move them any way.

    You're looking at a huge Extraordinary Assumption, that there is value once moved (other than salvage) (do you folks actually just move those frame on pier homes around??) and a huge Hypothetical Condition with actual ownership of the improvements.

    Good Luck :Eyecrazy:
     
    Last edited: Oct 17, 2010
  9. jlabauve

    jlabauve Member

    0
    Feb 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Louisiana
    The difficulting in estimating moving costs is that there must be a stated destination for the improvements. Cost is different if you are moving it across the street, or if you're moving to 45 miles away. Anyone who's seen these types properties being moved knows that they gotta move powerlines, etc.

    In reality it's highly, highly unlikely that this property gonna be moved. It's gonna stay right where it is. So the "moving" is theoretical.
     
  10. Denis DeSaix

    Denis DeSaix Elite Member

    425
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    Then, I think you are going to have to get some specific instructions from the court (not the attorney).
    It sounds like the assignment is moving away from "EAs" and toward "HCs".

    Again, the court needs a value. Describe the situation, give it some options, let it choose the parameters, and take it from there.
     
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