How would you do this?

[sputnam]

Builder walks away from a partially built dwelling (and the construction loan). The Client wants the value subject to completion AND the as is value of the property. The improvements are 50-55% completed. How do you support your opinion of the as is value?

 

[chad hampton]

I would have the client send you the construction budget and what they’ve paid out. Confirm that’s what done, Then take the land value plus that cost. You can only do what you can do

What I wouldn’t do is take the subject to completion value minus what’s left in the construction budget. I think that would be too high.

I’ve had to do these before, but the truth is it’s a ridiculous value to ask for. Any builder coming in to take over this home is going to be looking for a steal. More or less they want the bank to give it away or at least to the point where it’s very much financially feasible for a contractor to take it over.

 

[Zoe]

I would talk to original builder. Surely bank has original plans and specs. If bank agreed, I would try to get an expert to go out get me an estimated cost to complete based on original plans and specs and let bank pay their fee if they gave one. Maybe another local builder or building supplier like Home depot or Lowes migh have an expert that works for them and would go look at it. I would back into the "as is" value by estimated cost to complete. You could use a cost manual but a local expert would be better. The local expert could look at plans and specs and get pretty close on what they charge to finish it out.

 

[Zoe]

Somebody like home depot or lowes and I am sure many other builders have like software that will spit out an estimate on building plans and specs. They would have to go look at it and know what material is already there and make notes and go plug it in their software. They will do that if a person just carries them plans and specs. I think they charge a little. It don't take them long to do it. I think if the person agrees to buy supplies from them, they will do it for free possibly.

i would not think in this case they would charge over maybe $500-$600 with site visit and all. I have got a quote from them years ago and it was not much. Maybe $300. It was about 2400 sq ft GLA plans and specs. They were not doing a site visit on that bid. Some things they may not know like local code charges. They will know what you need and can estimate it but they can only be close on actual building cost estimates a contractor might have to pay other parties.

 

[J Grant]

Builder walks away from a partially built dewlling (and the construction loan). The Client wants the value subject to completion AND the as is value of the property. The improvements are 50-55% completed. How do you support your opinion of the as is value?

The as-is value, the unfinished property would appeal to an investor buyer, a speculator, or a contractor. They might spend an equivalent amount gut rehabbing -a house needing extensive repairs or stripped to teh studs, remodeled, and then resold. Look for those kinds of sales as comps as well as a cost approach, cost to finish, plus profit .

 

[NC Appraising]

I just ran into a comp like this the other day. High end home and I guess it was just to much. It also happens to flippers. Financing falls thru or a newbie that watched to much fip this house.

Maybe use search terms in MLS: unfinished, project, investor, incomplete, etc

What is the GLA and price point? Say 3000 sqft and 600k for move in ready homes.

Try searching a very wide area, 0-3 years back 2500-3500 sqft 250k-450k. Maybe that one unicorn property will show up. You will have to do some shifting...

derive a % and make an across the board adjustment?

 

[shrubberyvaluation]

Not easily. Best is to find other unfinished projects, even renovations of older dwellings left unfinished. Unfinished projects when the market crashed before will not be the best as a percentage but it could show a floor and more would be available most likely.

 

[Zoe]

I understand but I still say the eastiest way is "as if completed" with new construction sales and/or listings that are comparable and for "as is" back into it with cost to complete estimate. Forget a semi finished house. Don't use sales comps on "as is" value. Just as if completed minus cost to cure. Cost approach. Make sure you have entrepreneurial incentive built in cost to cure (complete). Have similar costs built in that a local contractor/builder would charge if you handed them the plans and specs and say go with it. I would guess and it is total guess their overhead costs would be like 15-20%. I don't know that. I don't know the market, but I could research and find out pretty quick in that market.

Depends on hungry the builders are there. Some might finish it out for as little as 10% return on the cost to complete it. If you can talk with original builder, he or she would probably tell you what their target return was on building the house. It would make a difference if this was an owner doing their own contracting overseeing the project vs a builder that is building and overseeing the whole project. Some owners contract building their personal residence and some hire a professional to do it all.

The lender is not going to be interested in contracting the remaining work on this house themselves.

 

[NC Appraising]

I had a request from AMC: New home framed plumber, etc. Budget 1.8 mill 372k spent to date. Per lender: appraiser to back into the value by using a cost to complete and include a builder/entrepreneurial profit of 15-20%

I ignored that quote order
..


I found two incomplete homes, just not new construction....
2430 lemon tree charlotte nc
4221 westcliff charlotte

 

[NC Appraising]

Probably preaching to the choir....

In my MLS, in public remarks and agent remarks you can search more specific:

*solar*
*unfinished* I would click not a basement and add two story homes only... to filter out unfinished attic and basement.

*gutted*