Appraising an outlier properties

[Mike Ault]

I definitely found the support for some of his assumptions lacking.

 

[App601]

You know your market then.
If you can't explain the "overprice" then you might want to consider if there is something shady in the transaction especially with some creative financing involved.

We inspected the property an d found that it is being used entirely for Airbnb This is a completely different ballgame and will require a commercial report Maybe the business is worth more than the Real Estate

 

[App601]

In all my years starting as a very young man I've never witnessed any appraiser try harder than this one to drive down a value by 30 %. It's almost like he's been hired by a valuation hit man or someone to kill the transaction. None of it makes any sense and what's the purpose ? What's the relationship to the buyer or seller? Nothing adds up in my analysis.

Personally if I was his manager I would fire him and take him aside and hand him a few phone numbers to some very good attorneys, because he's either unintentionally or intentionally entered the malpractice or calculated deception part of the valuation Twilight Zone.

Sometimes I think it a lot before posting a thread because I will be insulted by trolls who appear every once and then, like you may understand. Please read my comment to Fernando as it explains it all

Clenn: May AI ask you a question? Have you ever appraised a property at way less than its selling price? Just curious as I have done it several times since 1998

 

[KHS445]

I find it troubling that the amount of supposed research, grid adjustments, and opinion-forming you performed before inspecting the subject property and gaining an understanding of what you are appraising. We all do some preliminary research before accepting an assignment and performing the inspection, but to look back at 5 to 8 years of sale history, absolutely refuse to consider alternative subdivisions, state that a pool has $0 value, that additional square footage is basically worthless, forming an opinion of value approximately 65% of the contract sale price, etc. was a royal waste of your time and that of all the forum members that attempt to help you.

For most of us, when the results of our initial research doesn't add up, we start asking questions of the client, the real estate agent, the seller, etc., in an attempt to find out if we are missing something or if things are not what they appear to be.

The great thing about this profession most of us are very independent, and if the way you do things works for you, don't change anything.

 

[App601]

I find it troubling that the amount of supposed research, grid adjustments, and opinion-forming you performed before inspecting the subject property and gaining an understanding of what you are appraising. We all do some preliminary research before accepting an assignment and performing the inspection, but to look back at 5 to 8 years of sale history, absolutely refuse to consider alternative subdivisions, state that a pool has $0 value, that additional square footage is basically worthless, forming an opinion of value approximately 65% of the contract sale price, etc. was a royal waste of your time and that of all the forum members that attempt to help you.

For most of us, when the results of our initial research doesn't add up, we start asking questions of the client, the real estate agent, the seller, etc., in an attempt to find out if we are missing something or if things are not what they appear to be.

The great thing about this profession most of us are very independent, and if the way you do things works for you, don't change anything.

Take a look of this definition
Yes, an over-improvement can be a form of functional obsolescence, specifically called superadequacy. This occurs when a property has features or amenities that are too costly or of a higher quality than what is typically found or desired in that specific neighborhood. Essentially, the over-improvement doesn't add to the property's value because it's not in line with the market expectations or the surrounding properties.

In this particular neighborhood typical GLA is between 900 to 1200 sf

As of the 5 - 8 sale history it is included in linear regression and the program compensates and adjusts for time. I have been appraising since 1998 and took this course last year. It is a great SUPPORT tool for these situations, never the main source of support.

Finally after inspection, it is a property used entirely for Airbnb I still believe the real estate is not worth $300000 maybe, not even $200000, but the business may be worth $300000 or more. I have valuated businesses before and know what I am talking( or writing) about


Ohh You are correct in that I fired at a bird without seeing the bird first

 

[KHS445]

Take a look of this definition
Yes, an over-improvement can be a form of functional obsolescence, specifically called superadequacy. This occurs when a property has features or amenities that are too costly or of a higher quality than what is typically found or desired in that specific neighborhood. Essentially, the over-improvement doesn't add to the property's value because it's not in line with the market expectations or the surrounding properties.

In this particular neighborhood typical GLA is between 900 to 1200 sf

As of the 5 - 8 sale history it is included in linear regression and the program compensates and adjusts for time. I have been appraising since 1998 and took this course last year. It is a great SUPPORT tool for these situations, never the main source of support.

Finally after inspection, it is a property used entirely for Airbnb I still believe the real estate is not worth $300000 maybe, not even $200000, but the business may be worth $300000 or more. I have valuated businesses before and know what I am talking( or writing) about

By all means, continue to do things however it works best for you.

However, those who fail to think outside the box, rely on textbook definitions, and computer-generated programs will be the first to be replaced by AI. In this instance and with your reported license level, you have an opportunity to complete an appraisal for the dwelling and then calculate the contributory value of the ANB business. You need to explain what you have discovered to your client and offer to complete an appraisal that values both the real estate and business, at an increased fee. Due to the stated super adequacy, the real estate may be worth $225,000 - $250,000, and the business may be worth $75,000. Not that you should ever hit the number, but this may explain the contract price.

Was there anywhere in the contract a mention of FF&E being included, honoring reservations, settlement regarding deposits, etc? My wild guess is that there was, and you overlooked it as soon as you saw the contract price.

 

[App601]

By all means, continue to do things however it works best for you.

However, those who fail to think outside the box, rely on textbook definitions, and computer-generated programs will be the first to be replaced by AI. In this instance and with your reported license level, you have an opportunity to complete an appraisal for the dwelling and then calculate the contributory value of the ANB business. You need to explain what you have discovered to your client and offer to complete an appraisal that values both the real estate and business, at an increased fee. Due to the stated super adequacy, the real estate may be worth $225,000 - $250,000, and the business may be worth $75,000. Not that you should ever hit the number, but this may explain the contract price.

Was there anywhere in the contract a mention of FF&E being included, honoring reservations, settlement regarding deposits, etc? My wild guess is that there was, and you overlooked it as soon as you saw the contract price.

Thanks for the suggestion The way I receive work is through the Mercury platform I have 24 hrs to accept it or reject it I seldom reject work. However, what you say makes sense. If I see a sales price that sounds too high I should call the owner or RE agent and ask How was the sales price determined. Sometimes I am hesitant to ask these questions as it may raise suspicions from the seller that I disagree with the price. But maybe tell them that it is a normal procedure that I have to include in the report

In this particular case I tell you that it is most likely that the business will ,probably be worth more. Imagine 4 2 bed bedrooms and one that can sleep 6
This business may easily generate $1000 per day revenue. Assuming 50% year occupation that s $180000 gross revenue per year

This business may be probably worth $1MM or more. So it may not be "contributory" value as the business ma be worth more than the RE

I would love to appraise it as it is but it is not my decision to do it.

The problem is that there are wise guys who do not want to pay for a commercial appraisal and expect to achieve the same value with a residential one

I hate wise guys


Thanks and take care

 

[glenn walker]

We inspected the property an d found that it is being used entirely for Airbnb This is a completely different ballgame and will require a commercial report Maybe the business is worth more than the Real Estate

NOW A NEW STORY ****

 

[glenn walker]

I'm banging my head on the concrete now using a home for STR makes it motel or commercial real estate.

 

[App601]

I'm banging my head on the concrete now using a home for STR makes it motel or commercial real estate.

Flenn Yalker Guck Wou