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  #1  
Old 11-10-2009, 06:20 PM
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CANative CANative is online now
 
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Default Suggestions please (private appraisal)

Contacted by local Realtor. He and a property owner would like an appraisal of a property that they have been trying to sell for just short of a year.

They are going to split the appraisal fee and each wants a copy of the appraisal report.

Issues:
The realtor wants the report for the intended use (I presume) of having someone else take a beating if the property still doesn't sell (LOL).

The property owner wants an opinion of value to re-market the home at a price that will attract a buyer.

Q1: Are these different intended uses? If not, fine. I can identify both of the parties as clients and intended users. If they are different intended uses, are the uses so different that it will affect development and reporting? Should I avoid identifying both parties as clients/intended users?

Q2: The market is slow but a year of exposure is not atypical for high dollar oceanfront property. So as of this date it is at about the high range of DOM for a property of it's class but not excessively so.

What definition of of market value should I use if the clients want an opinion of value for the quickest sale as opposed to the possibility of another year on the market (They have had it listed a $1.5mm but reducing it by 10% might lead to immediate offers... who knows?).

Q3: What sort of questions should I ask them to extract enough information to set the proper scope of work? I worry that if I give them an egghead dissertation on all the issues they may get confused and nervous.

This is hard to explain on the ineternet so it may take a couple of replies/clarifications.
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Old 11-10-2009, 06:45 PM
Denis DeSaix Denis DeSaix is offline
 
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Quote:
Originally Posted by Greg Boyd View Post

Q1: Are these different intended uses? If not, fine. I can identify both of the parties as clients and intended users. If they are different intended uses, are the uses so different that it will affect development and reporting? Should I avoid identifying both parties as clients/intended users?
I think the intended use is the same: "how much will it sell and when?". Sounds like an exposure time problem. Give them 90-day, 180-day and typical.

Quote:
Q2: The market is slow but a year of exposure is not atypical for high dollar oceanfront property. So as of this date it is at about the high range of DOM for a property of it's class but not excessively so.

What definition of of market value should I use if the clients want an opinion of value for the quickest sale as opposed to the possibility of another year on the market (They have had it listed a $1.5mm but reducing it by 10% might lead to immediate offers... who knows?).
I think you use the same definition with an imposed-condition of a shorter-than-typical exposure time.

Quote:
Q3: What sort of questions should I ask them to extract enough information to set the proper scope of work? I worry that if I give them an egghead dissertation on all the issues they may get confused and nervous.
I don't think there is anything unusual to ask them other than to make sure they understand the differences in exposure time and what the premise is behind a shorter-than-typical exposure time: It is exposure time that drives where the value is going to fall within the range of possibilities. First we conclude the value at the typical exposure time, then we conclude the values at different exposure times.

Also, I'd want to express my value as a range.

I think you only need to rely on the SCA; if that is so, I'd make that clear and agreed to up-front. And I'd make it clear that it is a restricted-use report with no other intended users.

Have fun!

Edit to add: Depending on the property and buyer profile, the Cost Approach might be applicable if there is a potential for the buyer to build a substitute rather than purchase an existing one.

Last edited by Denis DeSaix : 11-10-2009 at 07:21 PM.
  #3  
Old 11-10-2009, 10:21 PM
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Q1. SOW is for marketing of the subject property.
Q2. Marketing period is typical for the property type. High end, OF are typically
90 to 180 day in remote non-Orange County locations.
Q3. Before embarking on the assignment, make it clear to your dihedra clients
that this is your opinion of value and it is your best estimate and it is not
intended to make anyone happy other than you will be pleased with the result.
And get your fee up front.
  #4  
Old 11-10-2009, 11:33 PM
panappr panappr is offline
 
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I've been doing a few of these and I always put both users on the appraisal. And it appears to be a typical scenario splitting the cost of the appraisal. My SOW is to estimate Market Value for marketing purposes. So far sales have been successful, but I can see how this could backfire without a proper reconciliation. Also once its in their hands who is going to be looking at it, potential buyers?, are they making copies and handing them out at open houses?, you never know. The last one I did, they called and asked permission to release it to the buyer, because the appraiser from the lender wanted to see it..... Nice
  #5  
Old 11-11-2009, 12:28 AM
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Doug DeMars Doug DeMars is offline
 
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Well...at least you know what it didn't sell for during the past 11 months considering the listing price.

How far off is the current listing? Does your gut tell you that it is way off mark?

I'd stay away from claiming any type of exposure time necessary to hit a certain price point....short of saying 3 DOM for a deeply discounted purchase price 50% of FMV. It sounds unique enough that if priced properly, it may sell in 8 days, 8 weeks or 8 months at the same list price. All it takes is one buyer and that one buyer may not be looking right now. DOM is more of a commodity type of parameter...and IMO, not a proper angle when looking at high-end real estate which is much less of a commodity.

My 0.02 worth.
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  #6  
Old 11-11-2009, 12:37 AM
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I would also highlight in my reconcilliation:

"Based upon current market evidence...my value opinion is XXX...however due to the unique...blah blah blah...market in major flux...blah blah blah...new market evidence may bring to light a different market opinion."

It's hard enough to predict the near future for properties in conforming areas...it's like trying to nail a jellyfish to the wall for the oddballs.
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  #7  
Old 11-11-2009, 01:20 AM
panappr panappr is offline
 
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Found it... This is how my last appraisal went down....

Appraisal Effective date 10/15/09 - EMV $535,000

Listing date 10/20/09 - Original listing price $559,950

Sale Date 11/07/09 - Sales price $550,000 (pending in escrow)

We shall see..... The list to sales price ratio in my analysis reported 5%.

The last one also sold and closed escrow slightly over my estimate of value.

Last edited by panappr : 11-11-2009 at 01:28 AM.
  #8  
Old 11-11-2009, 05:12 AM
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jay trotta jay trotta is offline
 
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Question

GB - high dollar oceanfront property (says it all right there)

ahh, the fun assignment, yea well do the best you can do, but the do, do you create should have a "Hold Harmless Agreement" upfront; close and personal, so there is no question later about how awful you are/were.

Problem with those lil cutes, they are limited to the market investor who will search the Coast for similar "Best Buys" under current market conditions; if it ain't a deal, it ain't sellin.

I will most assuredly agree with Denis - A Range of Value is most appropriate.

Cheers, Good Luck, Happy Hunting, Can I git Fires wit dat......hic up
  #9  
Old 11-11-2009, 08:28 AM
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Thanks all. Good replies.

Here's an image from CA coastal photographic records. I've done the two properties at the end of the peninsula (one of them 3x). Properties in this location are at the lower to mid-range of OF pricing along the Mendo coast.

http://www.californiacoastline.org/c...gs=0&year=2005
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  #10  
Old 11-11-2009, 10:21 AM
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Looks like at least 20 years of good economic life yet...before a few nasty winter storm systems push the coast back 100'!!
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