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modular house "addition"

Discussion in 'Urgent - Help Needed' started by scottspringer, Mar 10, 2006.

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  1. scottspringer

    scottspringer New Member

    0
    May 31, 2005
    Professional Status:
    Licensed Appraiser
    State:
    Maryland
    Hi! This is my first post so please be kind :) I'm appraising a single family home with a permitted accessory unit addition. The accessory unit is a modular house that was attached to the original stick built house. The only way to pass from one side to the other is through a door cut in the basement on the common wall of the two houses. The lender wants me to appraise it as a single family with the accessory unit.

    My questions are: How do I approach this? Do I adjust for the cost to cure the functional utility issue (the first floor common wall is where the original house has an updated kitchen)? Do I attempt to find detached "guest quarters" in the market, which I have not found?

    In addition, what to do about the two different types of construction. My thought is to base the appraisal on the main house by using the 1004 and consider the addition as an accessory unit, but do I adjust for quality of construction, it's not of the same quality of construction as the average stick built house.

    I appreciate any insight.

    Scott
     
  2. George W Dodd

    George W Dodd Senior Member

    0
    Jul 9, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Virginia
    Do you have experience to do this one?

    Appraiser Certification (new urar)

    11. I have knowledge and experience in appraising this type of property in this market.
     
  3. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    OUCH! But true! So does USPAP. I'd suggest you get with someone with more experience (since you don't even indicate your location) so that you can use this as a learning experience for yourself the next time it comes up (and it will).
     
  4. Jo Ann Meyer Stratton

    Jo Ann Meyer Stratton Elite Member

    25
    Jan 16, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Arizona
    It sounds to me like a home that has had the garage or carport enclosed either into livable area or a "mother in law" apartment. When I have situations like that I make my sketch very clear, sketching each area separately which calculates the square footage separately. Then on the front of the 1004 I have the square footage of the main house. In the Sales Comparison grid I have the main house square footage on the GLA line and the square footage of the accessory unit on the porch/patio or other line. Then I find other sales of homes with accessory units either attached or detached. Compare the main livable to main livable of the comparables. Compare the area and amenities of the accessory space to the accessory space. And then very detailed description of the situation and each comparable in my expanded comment section so that reader from 2000 miles away knows and understands exactly what I did. When searching for comparables look for mother in law or granny apartments, guest quarters, guest houses, casitas, etc, etc. Each real estate agent will use a different term to describe that extra space. Depending on the market of the subject the adjustment per square foot for the extra space may be similar to the subject or it might be vastly different.
     
  5. scottspringer

    scottspringer New Member

    0
    May 31, 2005
    Professional Status:
    Licensed Appraiser
    State:
    Maryland
    Experience

    I have been appraising the MD market for 15 years and have appraised many types of residential properties. Certainly I am required to be conpetent; however, this is obviously an unusual property. The "book" method to appraise this property is to deduct for the cost to cure the functional utility. Does anyone have any other ideas? I have looked for comps with in law, au pairs, guest quarters, etc... and have found very little to compare. I think the issue is the functional utility. I was hoping to get some other ideas.
     
  6. Steve Owen

    Steve Owen Elite Member

    0
    Jan 16, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Missouri
    Go for it

    While the USPAP comment is true... I submit that if you have been appraising for fifteen years, you are probably as competent to do this job as anyone else in your area. Jo Ann gave you some good advice. Otherwise, I think you are on the right track.

    The main issue probably is functional utility. However, you must also consider that the attached unit probably had a lower cost to construct andlikely has a lower per unit value for comparison purposes in the sales comparison approach. Therefore, I would definitely separate the two areas for analysis purposes... even if both could be considered gross living area.

    Find the best comps you can that have auxiliarly units and compare them to your subject. Definitely do a cost approach, regardless of whether you will put much weight on it... it might give you some different insights.

    One more thought. Functional obsolescence is often measured by loss of rent. So, you might consider what each space would rent for and then try to think about it from a couple of different perspectives. What would it rent for as one big space and what would it rent for as two completely separate spaces. That might help you to determine what the percentage of functional obsolescence is.

    Last of all, if this property is in an area of predominantly sfr's without auxiliarly units, consider the possibility that it might have some external obsolescence. This is especially true if zoning does not allow two-family occupancy.
     
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