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  #1  
Old 10-23-2009, 10:49 AM
jumpoutadplane jumpoutadplane is offline
 
Join Date: Sep 2009
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Default Appraising 2 homes on one parcel for FHA

I am appraising two houses on one parcel for an FHA loan. I believe that I will need to put this monster on multi-family form and will be using single-family home comps with adjustments for the second home???? Please give me any advice you can. Thanks!
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  #2  
Old 10-23-2009, 10:55 AM
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CANative CANative is offline
 
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How are single family sales comparable to a multi-unit property?

You seem to be implying that "the monster" is not an income property. This would mean that reporting the appraisal on an income property report form is not appropriate.
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  #3  
Old 10-23-2009, 10:59 AM
jumpoutadplane jumpoutadplane is offline
 
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One of the houses is currently for rent and vacant. It was rented about 9 months ago, so it is/will be an income producing property, the other house is owner-occupied. Which form would you use?
  #4  
Old 10-23-2009, 11:00 AM
jumpoutadplane jumpoutadplane is offline
 
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Would you use attached multi-family dwellings as comps?
  #5  
Old 10-23-2009, 11:40 AM
nstanbru nstanbru is offline
 
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Quote:
Originally Posted by jumpoutadplane View Post
Would you use attached multi-family dwellings as comps?
First, do a H&BU analysis. You must use comps that are appropriate for the property type you are appraising. If it's a residential income property, then use residential income property comps. If your subject is deemed to be a SFR with an accessory unit, select your comps accordingly.

Someone with a lot of FHA experience please correct me if I'm wrong about the possibility of this property being a SFR with AU.
  #6  
Old 10-23-2009, 12:19 PM
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Tawfik Ahdab Tawfik Ahdab is offline
 
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You need help with this assignment, which is often a challenge enough for seasoned appraisers.

If one of the residences is meaningfully larger or of superior quality than the other, the I would use the URAR rather than the 2-4 family form.

I have done many of these sub-types of residential property appraisals, almost exclusively in a rural setting, where acreage is an additional dimension of the appraisal prroblem.

Here's what I wrote in one appraisal. Perhaps you can adapt it to your subject property.

"The subject site contains two residences: a primary dwelling, and a secondary residence. As stated in the site description, this is a legal non-conforming (grandfathered) use, with both buildings having full replacement rights according to the county Land Management Division. This is one of the few instances in rural Lane County where two homes are allowed on the same parcel. This does not imply that the parcel can be subdivided or partitioned. Instead, it means that both homes must be sold with the land as one parcel. According to the owner's daughter, the secondary albeit newer unit was last rented for $850 per month on a month-to-month basis before being kept vacant and available for visiting family members. The owner provided water and sewage disposal. Electricity and garbage collection were the responsibility of the tenant.

The typical purchaser of this type of property would not be the same as the purchaser who buys a duplex for passive income production. The primary residence is larger than typical for a duplex unit, and thus constitutes the bulk of the improvement value on the site. The presence of the additional living unit may in fact be incidental, as it could quite possibly be used as a caretaker's home, mother in law unit, or a detached living area for dependent family members. The prior use as a rental is also fully allowable and could be resumed. This rental usage does not figure prominently into the overall appeal for the property. The primary appeal of this property would be to a family wanting an older home with acreage and seclusion.

This appraisal will be conducted on a single family residential basis and the value of the second living unit will be estimated and added as a single line item in the sales comparison approach if required for a comparison with a strictly single family residential comparable sale. The possibility of producing a duplex report was extensively investigated. The database required for such a report is not sufficient to produce a credible result. In addition, such a report would not accurately reflect the market worth of the subject property, or the intentions of the typical purchaser of this property.

The income approach is applicable in the case of the subject, but applies more specifically to the additional living unit than to the property as a whole. Following an investigation of the West Lane County residential rental market, the subject's prior contract rent at $850 per month is judged to hold at current economic levels. Analysis of area sales of single family residences with compatible site values revealed typical land-to-value ratios ranging between a low of 36% and a high of 43%, with 40% predominating. Investigation of a duplex sale and a recent two-dwelling sale within the defined neighborhood (nearby Mapleton to be precise) obtained gross rent multipliers (GRM) ranging from 101.5 (MLS # 15280) to 137.14, with the higher multiplier associated with the two detached dwelling property (MLS # 16177).

The valuation of the second, newer home, separately from the land, site improvements, and primary residential improvements is obtained thus:

Rent (at economic level) attributable to both land and the accessory living unit is $850 per month. The typical contribution of the site to total value within the neighborhood is 40%. Thus the contribution of the improvements to total value is typically 60% (.60). Rent attributable to the second home alone is thus $850 X .60 = $510. Given the most applicable GRM of 137.14, then $510 X 137.14 yields a contributory value for the second home of $69,410, say $69,400, via the income approach."

Last edited by Tawfik Ahdab : 10-23-2009 at 01:42 PM.
  #7  
Old 10-23-2009, 12:28 PM
jumpoutadplane jumpoutadplane is offline
 
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Default Thank you!

This is awesome! Thanks a million.
  #8  
Old 10-23-2009, 01:27 PM
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Webbed Feet Webbed Feet is offline
 
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Welcome to the forum... Now to business.... ;(

Quote:
Originally Posted by jumpoutadplane View Post
I am appraising two houses on one parcel for an FHA loan. I believe that I will need to put this monster on multi-family form and will be using single-family home comps with adjustments for the second home???? Please give me any advice you can. Thanks!
Ok.... First advice. How in the ding dong is it that you expect ANY decent answers with a three sentence post asking for help on a complex property?

Quote:
Originally Posted by jumpoutadplane View Post
One of the houses is currently for rent and vacant. It was rented about 9 months ago, so it is/will be an income producing property, the other house is owner-occupied. Which form would you use?
Hey! Way to go! Be sure and spoon feed us little tiny bits of information one post at a time as people try to respond to this. THEN, after providing incredibly inadequate information about the situation, ask us what form to use. No information about zoning, no information about possible highest and best use concerns, no information about the legal status.... Pretty much generally just no information other than FHA and you have two houses on one lot, one with a rental history.

Quote:
Originally Posted by jumpoutadplane View Post
Would you use attached multi-family dwellings as comps?
Now I have to ditto myself on my above..... Why don't you tell us that you have weather today in Florida and ask us if you should go see a movie or stay home and drink beer?

Quote:
Originally Posted by jumpoutadplane View Post
This is awesome! Thanks a million.
With great respect to Mr. Ahdab, who is a fine example of a very respectable real estate appraiser... Yes, why don't you plagiarize his work (Ok, it's with his permission to aid you with an example. He's a wonderful guy!!! ) in the course of asking us for advice regarding real estate that you probably have not so much as contacted your local jurisdictional authority about to get information involving the legal status of the improvements? Because if you'd done a lick of research about this property, other than some rental history of the second house, you sure conveniently leave all of it out of your posts. That just might be why it appears from the thread that you have failed to follow the SOW Rule and can't comprehend what form should be used for the intended use to comply with Standard Two of USPAP as well as the other involved GSE requirements....

So that is my advise. Back up and do the research you should have done with the J.A., then follow the SOW Rule, before you start asking us what form to use...



P.S.. When any appraiser fires right up with little to no information and asking what "form" to use, it is a sure bet they have failed to identify what it is they have been asked to appraise is. That is why they don't know what form to use. And If they don't know what they have been asked to appraise is.... they cannot have possibly complied yet with the SOW Rule. And If we are still out of compliance with the SOW Rule, we have not yet complied with the Ethics Rule. Do you now see all the implications of telling other appraisers that you don't know what form to use? It screams of a very bad case of "Form Think" instead of knowing how to follow the steps needed to identify what one's subject is. If you don't know what your subject is, how can you do this assignment? How could you possibly comprehend what form to use or how to comp the property?

Last edited by Webbed Feet : 10-23-2009 at 02:01 PM.
  #9  
Old 10-23-2009, 01:35 PM
jumpoutadplane jumpoutadplane is offline
 
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Default Thanks for all of the sarcasm

Hey guess what! This is the first time I have used this forum and I cannot believe all of the immature, childish remarks and thoughts. If this is all you do all day..... sit on this forum and tell people how inept they are in trying to solve their problems, then do not post!
  #10  
Old 10-23-2009, 01:46 PM
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Mr Rex Mr Rex is offline
 
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You are supposed to say "Mean Appraisers Suck!". Forum rules.
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