Latent Defect Discount Question

[John Adams]

@ George: The question is not how to determine a value of the defect.
My question is if there should be any deduction or effect on value because the subject is not for sale. The owners are appealing the tax assessment based on the $25K cost to replace the facade. If that logic is true, then everyone who has substantial repair (bad roof, bad HVAC...) should also get a short-term assessment reduction which would be absurd. But the assessment is based on market value which makes deductions for defects.

 

[George Hatch]

If you're using the definition of MV one of the assumptions in that definition is they there's a hypothetical sale, involving well informed/advised buyers and sellers, acting in what they perceive to be their own interests and such.

If you're using a different definition of value then the assumptions in that definition will be of effect on what you do in your analysis.

The question you're answering is the question they're asking you to answer - "what's the value today?". They're not asking you what they should do about the assessment or for how long they should do it. That's a user decision, not an appraisal issue.

 

[Mike Kennedy]

No listings or sales in HOA since defect found in past two years.

any units with the defect sold in 3 yrs? actively listed then withdrawn after how many DOM? Vs similar external comparables without the leakage prob?

 

[John Adams]

I am using the common definition of MV which would an include a discount for the wall repair, but if this is true, then everyone who has a substantial house repair could request an assessment discount which is illogical.

 

[John Adams]

@ Mike, the question is not how to quantify the discount. My question is if there should be any discount at all because then everyone who has a substantial house repair could request an assessment discount which is illogical.

 

[J Grant]

I am using the common definition of MV which would an include a discount for the wall repair, but if this is true, then everyone who has a substantial house repair could request an assessment discount which is illogical.

You sound confused about trying to get a tax appeal in assessed value and your role as an appraiser to perform a MV purpose appraisal.

 

[George Hatch]

I am using the common definition of MV which would an include a discount for the wall repair, but if this is true, then everyone who has a substantial house repair could request an assessment discount which is illogical.

Why is it illogical? You could put any one of them up for sale right now and expect them to sell for less than "as repaired". If you put them all up for sale at the same time they'd probably each sell for less than if you just put one of them up.

Stop worrying about the project as a whole. Your assignment is the one unit.

 

[John Adams]

George, I am not thinking about the other houses in the same HOA. My theoretical question is people all over the county have substantial house repairs. It would be illogical for everyone who needs a new roof or other costly repair to appeal their taxes based on the repair costs. Thus, if everyone who needs a new roof cannot get an assessment discount, then why should this person? But we use MV to determine the assessment and MV includes a discount for defects.

 

[J Grant]

@ Mike, the question is not how to quantify the discount. My question is if there should be any discount at all because then everyone who has a substantial house repair could request an assessment discount which is illogical.

I't is illogical, and there is why , only a minority of people who have a substantial house repair would request an assessment discount, because most people FIX THE REPAIR ISSUE. (or plan to ) If they can not afford to fix it or are too distracted to plan for it, I bet they have other pressing problems and a tax appeal is way down on the list.(if it is even in their radar )

 

[John Adams]

@ J Grant: It is a conundrum. On one hand, it is very easy to determine the MV with a discount, but on the other hand why should the owners get an assessment discount for a repair?