How Do You Adjust for a Unique Feature

[bnmappraisal]

What would I do? Leave it up to you COMM/RURAL folks to figure it out! Definitely NOT try to give any advice as a "city slicker"
Interesting thread tho TS

 

[Surf Cat]

What would I do? Leave it up to you COMM/RURAL folks to figure it out! Definitely NOT try to give any advice as a "city slicker"
Interesting thread tho TS

Right? All of Terrell's jobs he posts about are out of my wheel house. Interesting reads for sure.

 

[RCA]

I recently appraised an executive farm that had a huge shop - 5500 SF, 2 lifts, nearly new, insulated, heated, restroom, 7 overhead doors 10x12. (the builder was in the transmission business before building this after retiring.) Couple hundred acre. The house about 4,500 SF. Two issues. One is basically there is no sold property in the past 2 years with anything similar to the shop - it is obviously over-built but it still contributes value. (I searched 2 counties.) Finding a large acreage tract with a large 20 year old house with a pool was one thing (I did find one excellent comparable for that) but the difference in a hay barn vs this huge shop.

And how would you estimate the contributory value of the shop? Cost related? And where to estimate the functional obsolescence? Hunt three states for comps? (Probably fruitless search.) And what would you use as a proxy for such a shop? A hay barn won't cut it. A 2,000 SF shop without a lift won't cut it. So how would you handle this? Or would you seek a commercial building in town with similar features and extract a contributory value to the sale?

What happened to the income approach? Suppose he using the shop to do repairs. What kind of repairs could you do in it and what would it cost to have someone else do the repairs? Could it be used to do repairs for other farmers in the area? I would combine, if possible, both the Cost and Income Approaches. The problem with the Cost Approach is that he may have purchased more equiment than necessary. Other issue is what percentage of farmers are capable of using the shop to get work done? If the farm were put up for sale - what would some farmers be willing to pay extra for the shop? And, you should be able to ask around.

 

[sputnam]

How do you adjust for a unique feature? There are more than 30 accepted techniques for extracting adjustments from market data. The one(s) that you use for any particular feature depends on the quantity and quality of market data avialable. If you only have paired sales analysis or regression in your quiver, you might consider taking a class or doing some reading. One of the easiest methods is depreciated cost analysis.

 

[RCA]

How do you adjust for a unique feature? There are more than 30 accepted techniques for extracting adjustments from market data. The one(s) that you use for any particular feature depends on the quantity and quality of market data avialable. If you only have paired sales analysis or regression in your quiver, you might consider taking a class or doing some reading. One of the easiest methods is depreciated cost analysis.

"Unique Feature" means that another comparable with that feature can't be found within a reasonable distance. Of course, the OP limited himself to two counties; however, appraisers often go much further to find comparables, considering as big an area as the US and Canada. In the latter case, appraiser forums can be used to send out queries in different directions.

 

[KHS445]

I just finished 78 acre 50% agricultural & 50% wooded/wet areas, with one existing 6,880 SF pole barn and a proposed 8,800 SF wedding venue pole building. The existing pole building was a typical agricultural building, with a concrete floor, exposed framing, minimum electrical and no plumbing. One 10' overhead door and a 16' sliding door on each end. The proposed building was going to have an approximately 6,000 SF 14' high eaves reception hall, with no HVAC (in northern Michigan), no insulation and with the exposed framing being painted white. On each side plans called for about 1,400 SF additions that would have HVAC, plumbing, insulation, etc. One side was going to be the bride and party ready area, which was going to be mostly open with an enclosed private bath and shower. The other side was going to be two multiple stall bathrooms, a prep kitchen and a storage room. They were adding some fancy glass overhead garage doors to allow in some natural light and to open up the facility.

I ended up using all three approaches. The contractors estimate to construct the new building was $1,200,000 +/-, while my cost estimate for the new building was about $800,000, to which I added the land value and the depreciated value of the existing building. For the sales approach I had fairly good information, from another recently completed report, as to the contributory value of second and third pole barns on the same site. I then valued the acreage along with the existing pole barn based on comparable sales, then added the estimated contributory value of the proposed building. The Income was really wacky, the property owner told me and provided myself and the lender with her income and expense projections. I was a bit skeptical to start and as I researched typical rental fees for similar type wedding venues, I found her projections were more than 3 to 4+x's what others were charging. I was fortunate in my research of wedding venue rental charges as one of the people I cold called and explained what I was doing offered to send me a copy of a price/service survey he had conducted in May. Altogether he provided me with information regarding 30 separate venues.

I ended up providing the lender with a range of value which had a nearly $800,000 spread. I told them if they want to use cost as their loan basis fine and if they want to use market that is fine also. From an income standpoint, I told them most of the projected income value would be attributed to the business and personal property. Based on my market research regarding income potential and the projected expense the income value was under $200,000.

Kind of like the old story that asks how does a mouse eat an elephant? One bite at a time.

 

[RCA]

I just finished 78 acre 50% agricultural & 50% wooded/wet areas, with one existing 6,880 SF pole barn and a proposed 8,800 SF wedding venue pole building. The existing pole building was a typical agricultural building, with a concrete floor, exposed framing, minimum electrical and no plumbing. One 10' overhead door and a 16' sliding door on each end. The proposed building was going to have an approximately 6,000 SF 14' high eaves reception hall, with no HVAC (in northern Michigan), no insulation and with the exposed framing being painted white. On each side plans called for about 1,400 SF additions that would have HVAC, plumbing, insulation, etc. One side was going to be the bride and party ready area, which was going to be mostly open with an enclosed private bath and shower. The other side was going to be two multiple stall bathrooms, a prep kitchen and a storage room. They were adding some fancy glass overhead garage doors to allow in some natural light and to open up the facility.

I ended up using all three approaches. The contractors estimate to construct the new building was $1,200,000 +/-, while my cost estimate for the new building was about $800,000, to which I added the land value and the depreciated value of the existing building. For the sales approach I had fairly good information, from another recently completed report, as to the contributory value of second and third pole barns on the same site. I then valued the acreage along with the existing pole barn based on comparable sales, then added the estimated contributory value of the proposed building. The Income was really wacky, the property owner told me and provided myself and the lender with her income and expense projections. I was a bit skeptical to start and as I researched typical rental fees for similar type wedding venues, I found her projections were more than 3 to 4+x's what others were charging. I was fortunate in my research of wedding venue rental charges as one of the people I cold called and explained what I was doing offered to send me a copy of a price/service survey he had conducted in May. Altogether he provided me with information regarding 30 separate venues.

I ended up providing the lender with a range of value which had a nearly $800,000 spread. I told them if they want to use cost as their loan basis fine and if they want to use market that is fine also. From an income standpoint, I told them most of the projected income value would be attributed to the business and personal property. Based on my market research regarding income potential and the projected expense the income value was under $200,000.

Kind of like the old story that asks how does a mouse eat an elephant? One bite at a time.

That is very good.

 

[residentialguy]

HBU: Convert it to an AMC

Call JT for more info

 

[Tom D]

big city appraiser. enclosed tennis ct, pickle ball ct, basket ball court value. don't most wealthy people has some sort of car collection.

 

[Terrel L. Shields]

If you only have paired sales analysis or regression in your quiver, you might consider taking a class or doing some reading. One of the easiest methods is depreciated cost analysis.

This kind of improvement is one of a kind usually. Which is probably why depreciated cost might be the only way to fly. But the issue remains of how to calculate functional obsolescence in the absence of any proxy for that special improvement. I mean, I can find pools, try to find one similar to my subject, and then extract the value. But valuing a building that could well serve as a repair shop in town...well, do you try to estimate the contribution of a similar shop in town and call it a proxy? The town property likely only suffers normal wear and tear. It's when you put it out in the country that you have an issue. Who wants it and how much would they want to pay for it?

There are a lot of such difficult to measure items I've encountered in 30 years plus. The executive home with paved private airport with large hangar comes to mind. Those pesky cell tower leases. Abandoned baby chick hatchery. And I have a very nice event barn nearby. Lucky my assistant valued the place before they built the barn. It's cute and has a really cute buggy to go with it... but what to do what to do.