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Old 04-25-2005, 05:26 PM
Doug in NC's Avatar
Doug in NC Doug in NC is offline
 
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How would you approach appraising two houses on one lot. Property is 5 acres, and according to homeowner, this is permitted by zoning? Problem is, this scenario is not at all common in this market. I have seen "carriage houses" built next to 3,000+ square foot homes, in older neighborhoods in a few instances, but even these properties rarely sell. It also occurs in $500K+ neighborhoods, but this is more of a $250-300K market. This property has a 1,500 square foot home and a 1,000 square foot home. I'm guessing the second house isn't going to add much to the value. Superadequate?

I have already done a preliminary search and nothing remotely similar came up. The first thing I did was to call the client and find out if they want me to proceed under the circumstances. Oh yeah, and fee increase was immediately requested. This is going to be a learning experience.
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Old 04-25-2005, 05:50 PM
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Workbox Workbox is offline
 
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Quote:
Originally posted by Doug in NC@Apr 25 2005, 05:26 PM
This is going to be a learning experience.
OH YES IT WILL! :lol: I come across these once a year. Tell the lender the situation and and let them decide. Most times they would like for it to seperate legals, but in this case, "yeah right". You will have to explain the heck out of it and just give it some sort of contributory value or as quarters or guest house. Or just don't give it value, since you don't have anything to compare it too, but this option won't fly. This is what I put on one report;

"Subject has an additional improve which is located on the same tract of land as the proposed improvement. No entry was available at the time of inspection and sq. footage is based on county appraisal district. Subject contributory value due to limited similar sales and and unique combination of two improvements on the same lot, contributory value was limited for actual assessment."

This worked for me, but again, research, research.
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  #3  
Old 04-25-2005, 07:05 PM
Em Tee Em Tee is offline
 
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Gee, Doug, move it over here to Oakland and you'll have about 5,000 comps!!! :lol:
  #4  
Old 04-25-2005, 08:55 PM
Randolph Kinney Randolph Kinney is offline
 
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Quote:
Originally posted by Doug in NC@Apr 25 2005, 05:26 PM
How would you approach appraising two houses on one lot. Property is 5 acres, and according to homeowner, this is permitted by zoning? Problem is, this scenario is not at all common in this market. I have seen "carriage houses" built next to 3,000+ square foot homes, in older neighborhoods in a few instances, but even these properties rarely sell. It also occurs in $500K+ neighborhoods, but this is more of a $250-300K market. This property has a 1,500 square foot home and a 1,000 square foot home. I'm guessing the second house isn't going to add much to the value. Superadequate?

I have already done a preliminary search and nothing remotely similar came up. The first thing I did was to call the client and find out if they want me to proceed under the circumstances. Oh yeah, and fee increase was immediately requested. This is going to be a learning experience.
Is the zoning and conforming use single family residential? Is the request a 1004?

If so, you can have a secondary detached structure that is livable and still appraise it as SFR on form 1004. These are commonly called "granny flats" or guest houses. These are not rentals, although some owners will rent them out.

You need to find comps with a similar structure and some without to determine the market adjustment. In any case, you can give it value in the cost approach. Note in the addendum if you are or are not making valuation adjustments and reason. If you have no comps with a secondary detached structure, then you can't make any adjustments for it. If that is the case, your market value estimate is conservative.
  #5  
Old 04-26-2005, 06:17 AM
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Doug in NC Doug in NC is offline
 
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The owner said she built the first house "with her own two hands". Should have thought to contact an appraiser before spending $50K building a house that has no market. Maybe someday she will split the lot. Chapel Hill, NC is known for its artsy and strange inhabitants. :eyecrazy:
  #6  
Old 04-26-2005, 07:40 AM
Ken-NC Ken-NC is offline
 
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Doug,

That's a fairly common item in certain neighborhoods around here. However, if you can't find any comps with a similar feature and you'd have an across-the-board adjustment, then perhaps you could explain what's there and since you could not locate any sales with similar features, you applied no value to it?
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Old 04-26-2005, 08:46 AM
Mark Mosley Mark Mosley is offline
 
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I did something like this in Apex NC about 15 years ago. They had converted an old tobbacco barn into a guest house with HVAC, running water, a loft, the works. They flipped out when I assigned it a nominal contributory similar to a small barn. After all it wasnt the main improvement to the property. The property owner seemed to think it was worth big bucks. Of course no comps were available which were even remotely similar, and a cost analysis didnt reflect much as it was only about 400 sqft, with a 300 sf loft, built out of salvaged lumber. Lots of letter writing and threats ensued. I stuck to my guns and was fired from the trainee position shortly thereafter. :rofl:
Its sorta funny now.
  #8  
Old 04-26-2005, 12:51 PM
Jim Onderisin Jim Onderisin is offline
 
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Be sure to talk with people in zoning office to get their input. Pick the "main" house to which you'll compare sales. Usually, it stands out from the two. Determine a market value contribution for the "other structure" to use in the sales comparison analysis. I include a picture and a description of the "other structure", but no sketch. In the cost approach, I'll include the "other structure" as a separate line item. I try to be realistic with the market value contribution. Example, if the cost to build the "other structure" is, say, $50,000 and it's a legal structure, then you KNOW the market is going to pay SOMETHING for it. It's just common sense.
  #9  
Old 04-27-2005, 12:43 PM
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Doug in NC Doug in NC is offline
 
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Shame on the homeowner, she told me she paid nearly $215K to build her less than 1,000 square foot house! The house is nice with vaulted ceilings tile floors and granite countertops, but $200/SF not including any land! (this is for the "carriage house") Other house on lot is a passive solar home with only 2 bedrooms. Amazingly, I have at least found passive solar home comps and at least one 2 bedroom comp (3 or more bedrooms are pretty standard in this market). Good thing there are plenty more nuts buying odd properties in this market.

Homeowner doesn't have a clue about market value. She thinks that just the fact that land becomes improved with a structure increases the land value itself. In order to get an estimate on the land value, I asked her if she knew of any nearby sales. She told me she was planning on buying an adjacent 5 acre tract for $82K. This was around $20K lower than the tax land valuation. I don't think this one is going to come in where she wants it.

Wonder what the $ figure limit is on functional utility? This one is going to have over $100k I bet. Crazy homeowners and the things they do. Vonage commercial? Whoo whoo, whoo whoo whoooo.
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