Need your input

[It is me in Texas]

I have a property 1975 that burned in 2005. Has been rebuilt as it was a total loss. Rebuilt very nicely and garage converted. In the neighborhood, all are close to the 1975 age. I am taking one-2 sales in the neighbor that is smaller as these have 2 car garages. I am then looking at the sf in a competing neighborhood where the sf is close to our subject and somewhat newer in age. This is the first time I have had this situation . Would love to see your comments. .

 

[Terrel L. Shields]

It's your decision, but personally there are 3 factors -

Recent - the newest sales (not an issue in this case)
Proximate - well, that's probably going to be older sales nearby which is your issue
Similar - And therein lies the rub. The dwelling is 20 years old however. So, your choice is going to be do I use the most updated but proximate sales of buildings originally built in 1975? Or do I find 20-year-old comps from a nearby area. I would look for houses of similar size, style, and age and if I found older nearby sales of similar size and style, then I would use them all.

I would do the old reverse cost approach on each sale to develop an EFFECTIVE AGE and adjust accordingly using sensitivity.

This provides me with a calculated EA for each comp
Then the EA is transferred to the sensitivity for age
And the adjustment for each comp is determined.

This is not necessarily a fast process. Each comp takes time to develop a value for the land, a value for outbuildings and amenities, and it's not a run and gun process you do in 5 minutes.

 

[chad hampton]

I think you’re on the right path. Youselect comps that are available. Maybe give a little more consideration to the cost approach and use that as a guide. Definitely select a couple from the neighborhood and the. 1-2 newer builds. Always tough to do those, no right or wrong answer, just give the best opinion you can.

 

[Overimprovement]

Unless your house had the foundation ripped out it's still built in 1975. I would look for comps in your neighborhood that have had extensive updates in recent years or at least in the 2005 time frame. That way both GLA and condition will both be similar.

 

[Mark K]

I have a property 1975 that burned in 2005. Has been rebuilt as it was a total loss. Rebuilt very nicely and garage converted. In the neighborhood, all are close to the 1975 age. I am taking one-2 sales in the neighbor that is smaller as these have 2 car garages. I am then looking at the sf in a competing neighborhood where the sf is close to our subject and somewhat newer in age. This is the first time I have had this situation . Would love to see your comments. .

I wouldn't bother using 50 yr old comps for a 20 yr old home unless there is nothing else. Discuss in the comments the reason for leaving the neighborhood and if you feel compelled, include one in the same 'hood. You should have a fairly large adjustment for age for this one; explain away.

 

[TerryRohrer]

I would be looking for newer homes in your subject neighborhood, or homes that have been heavily remodeled. I have seen a number of times where a completely new home, constructed on an infill site surrounded by older existing homes, sells at a price within the upper end of the overall range in values in that neighborhood, and slightly above the average and median sales for similar sized and appointed homes, but does not sell at a price approaching what similar homes would where they are surrounded by similar, similarly aged homes.

https://study.com/academy/lesson/the-principle-of-progression-in-real-estate-definition-example.html

 

[Mark K]

I would be looking for newer homes in your subject neighborhood, or homes that have been heavily remodeled. I have seen a number of times where a completely new home, constructed on an infill site surrounded by older existing homes, sells at a price within the upper end of the overall range in values in that neighborhood, and slightly above the average and median sales for similar sized and appointed homes, but does not sell at a price approaching what similar homes would where they are surrounded by similar, similarly aged homes.

My experience has been the opposite. $400K, 40 yr. old neighborhood. House burns. Lot is cleared and $1M house built. It sells for about $1M.

Maybe over time the $400K neighborhood increases in value faster than the $1M house in the same 'hood but there's always a substantial difference in price.

Many of the older neighborhoods have large lots, better locations, etc. than the newer subs. 10-20 yrs. ago I'd probably agree with you but these days, not so much. Maybe due to high lot prices; a lot of existing homes have little more value than a tear down.