How to determine effective age?

[Gina Martin]

I am needing some advice on how to go about determining the effective age.
The subject is a duplex. Unit 1 is 1,200 GLA built in 1934. Unit 2 is huge with 2,800 sft built in 1950's. Both units have been completely updated from top to bottom, inside and out. New everything. Any advice would be great. Thanks.

 

[Farm Gal]

Does 'new everything' include gutting to studs and full replacement of all the mechanicals?

If not there is some aging right there.

IF it has been totally refurbished down to the bare bones your effective age may be somewhere between the year all this lolly work was completed and today... or 'thatamany years' plus whatever the market would ding the place for the original framing and foundation... yeah that might be considered Functional but the lines get pretty blurred!

It can be really hard to give such homes a solidly developed scientifically supported EA... sometimes you gotta go with your OPINION.

Sorry I don't have a more definitive answer: it DEPENDS!

 

[Bernie I. Garcia]

Effective Age

I am needing some advice on how to go about determining the effective age.
The subject is a duplex. Unit 1 is 1,200 GLA built in 1934. Unit 2 is huge with 2,800 sft built in 1950's. Both units have been completely updated from top to bottom, inside and out. New everything. Any advice would be great. Thanks.

1200 SF/ 4000 x 73 (age) = 21.90

2800 SF/ 4000 x 55 (appx. age) = 38.50

Total 60.40 Say eff. age is 64

If there is deferred maintenance deduct under "condition".

Bernie Garcia
626/967-4245

 

[Terrel L. Shields]

Check your comps. Subtract the land value from the comp and determine the RCN. Say, $100/SF RCN, say in a sale, contribution of $200,000 building less $50,000 land is $150,000. 150,000 ÷ 4000 SF = $37.50/SF. So $62.50 (aka %)of the RCN is gone. Residual remaining is 37.5%. If the age of the comparable is 30 years old, then 62.50% ÷ 30 = 2.08%, say 2%...100% ÷ 2% = 50 YEARS total life. With the remodeling, your dwelling suggested by the comparable sales of equal condition-quality.
Assuming your subject is equal in condition-quality (age) then the effective age is about 31 years with 19 years remaining life. Do all the comps that way. If you come out with 3 answers, (say, 31, 40, 19) then use that as a bracket to determine where in the range your subject belongs. If you cannot find comparable land sales, then use one of the alternative ways of determining land value (residual, allocation, abstraction,etc.)

 

[Kenneth Reynolds]

Bernie,
Believe me when I say that you really cleared up how to approach the age of this duplex. Can you help me understand what you did? If "everything is new" in both units would the effective age not be much less years than the 64 in your formula.
It seems to me that your formula takes care of the actual age of the duplex but the effective age, depending on what "everthing is new" would be something far less than 64 years. Am I wrong?
Thanks

 

[Kenneth Reynolds]

Mr Shields,
Great help for this situation. Just printed your explanation for future use. Now all I have to do is try to remember those alternative ways to find land value if need be.
Thanks for what you do.
Ken

 

[3 Putt]

You cannot accurately determine the effective age without doing the cost approach. Since the cost approach would not be applicable in this assignment, simply put N/A in the box. Just because there is a space, does not mean it must be filled in!

 

[Em Tee]

1200 SF/ 4000 x 73 (age) = 21.90

2800 SF/ 4000 x 55 (appx. age) = 38.50

Total 60.40 Say eff. age is 64

If there is deferred maintenance deduct under "condition".

Bernie Garcia
626/967-4245

Hmmm.... doesn't make any sense at all. Based on your calculations, shouldn't it be somewhere between 21.9 and 38.5????

 

[Fred]

You cannot accurately determine the effective age without doing the cost approach.

EA is a number that appraisers make up. In one guys "theory" it's 10, in another, it's 20.

So $62.50 (aka %)of the RCN is gone

Gone? There's about 100% chance it would cost more to build now.

 

[Fred]

shouldn't it be somewhere between 21.9 and 38.5????

No, he saying the weighted average is between 55 and 73, closer to 73.