2-4 units, Unit adjustments

[Smokey Bear]

I've always gone out of my way to compare like buildings - duplex comps for duplexes, etc. I'm reviewing an appraisal of a 4-plex (hate the term 'quadruplex, it sounds like someone trying to justify their overeducation LOL). The appraiser used two duplexes and a triplex, with $5k unit adjustments on a $430k property.

First off, I don't know you can determine unit adjustments if you don't have at least one comp with the same number of units as the subject. Second, how DO you come up with unit adjustments? Find a triplex that is 3/4 the size of a similar 4 plex that is similar to the subject, and use the price difference as your adjustment? Like I said, I've worked in an area that always had sufficient comps of the same time. (lucky me) and would rather go back in time for comps than use something with a different unit count.

 

[ddnma]

I've always gone out of my way to compare like buildings - duplex comps for duplexes, etc. I'm reviewing an appraisal of a 4-plex (hate the term 'quadruplex, it sounds like someone trying to justify their overeducation LOL). The appraiser used two duplexes and a triplex, with $5k unit adjustments on a $430k property.

First off, I don't know you can determine unit adjustments if you don't have at least one comp with the same number of units as the subject. Second, how DO you come up with unit adjustments? Find a triplex that is 3/4 the size of a similar 4 plex that is similar to the subject, and use the price difference as your adjustment? Like I said, I've worked in an area that always had sufficient comps of the same time. (lucky me) and would rather go back in time for comps than use something with a different unit count.

A few years back someone forwarded me an appraisal of a 4-flat (I prefer that term) where there no comps of similar units in the area. the appraiser used 2-flats and made the "assumption" that they were 4-flats... and doubled everything...sales prices, GLA, rents etc.... I had never seen it before or since.

 

[Smokey Bear]

Hmmm. Where I'm from, a flat means an entire floor. Lots of them in San Francisco.

I think in these cases they might need to use an income approach. I'm looking at that now.

 

[Mike Kennedy]

What information was reported which supported HABU as a 4 Family Property?

 

[Smokey Bear]

What information was reported which supported HABU as a 4 Family Property?

Well, they checked the box that said current use. Could be there just aren't many sold because the owner's like them so much. It's in Torrance (suburb of LA), not a hard assumption that they're useful there.

 

[Mike Kennedy]

http://www.clrsearch.com/Torrance_Demographics/CA/90505/Housing-Statistics-Occupancy-and-Year-Built

http://www.torranceca.gov/8712.htm

ARTICLE 3 - ESTABLISHMENT OF DISTRICTS
ARTICLE 4 - R-1 SINGLE FAMILY RESIDENTIAL DISTRICT
ARTICLE 6 - R-2 TWO FAMILY RESIDENTIAL DISTRICT
ARTICLE 7 - R-3 LIMITED MULTIPLE FAMILY RESIDENTIAL DISTRICT
ARTICLE 8 - R-R-3 RESTRICTED MULTIPLE FAMILY RESIDENTIAL DISTRICT
ARTICLE 9 - R-4 UNLIMITED MULTIPLE FAMILY RESIDENTIAL DISTRICT
ARTICLE 10 - R-P RESIDENTIAL PROFESSIONAL DISTRICT
ARTICLE 11 - R-5 HIGH RISE RESIDENTIAL DISTRICT
ARTICLE 12 - LP - LIMITED PROFESSIONAL OFFICE DISTRICT
ARTICLE 13 - R-3-3 THREE-UNIT MULTIPLE-FAMILY RESIDENTIAL DISTRICT



What department(s) do I need to contact when renovating my home or building a new home?
For building permit information contact the Building & Safety Division at (310) 618-5910. For information on zoning & land use contact the Development Review Division at (310) 618-5990.

http://www.torranceca.gov/9179.htm

 

[PropertyEconomics]

I've always gone out of my way to compare like buildings - duplex comps for duplexes, etc. I'm reviewing an appraisal of a 4-plex (hate the term 'quadruplex, it sounds like someone trying to justify their overeducation LOL). The appraiser used two duplexes and a triplex, with $5k unit adjustments on a $430k property.

First off, I don't know you can determine unit adjustments if you don't have at least one comp with the same number of units as the subject. Second, how DO you come up with unit adjustments? Find a triplex that is 3/4 the size of a similar 4 plex that is similar to the subject, and use the price difference as your adjustment? Like I said, I've worked in an area that always had sufficient comps of the same time. (lucky me) and would rather go back in time for comps than use something with a different unit count.

One could go back in time and measure as a percentage, on a per unit basis, the differences between duplexes, tri-plexes and 4-plexes and then apply those percentages to current sales. The older sales would not have to be listed as "comparables" within the sales comparison approach but they would have to be considered and presented within the analysis of sales addenda.

I also know many are not a fan but an income analysis can also be made to estimate an adjustment within the market approach. Yes I know many say that is mixing approaches ... but it is done all the time and the ultimate goal is to conclude at an opinion of value that is supported and credible.

 

[Tim The Enchanter]

Definitely use an income approach, hopefully you have data.

For sales comp, I'd think you need to find at least one 4-plex comp,
even if it's a year or 2 old sale.

I haven't been to Torrance in quite a while. But it looks like Mike Kennedy has some good links for you. Municipal codes, baby. Gotta read 'em sometimes.

 

[Michigan CG]

Definitely use an income approach, hopefully you have data.........

Are there appraisers who don't ALWAYS use an income approach on a two family property?

 

[Calvin the Airedale]

One way to look at the varying comps is to break them down on a per unit basis and perform a per unit comparison with the subject, adjusting them for all the items of difference, size per unit, lot size per unit, et cetera. Will there be a difference between 2 unit properties and three, or four unit properties. Mostly likely, but such differences too can be adjusted in the comparison, whether one attributes them to differences in density, or privacy or any number of other factors. This approach merely correlates on a per unit value then multiplies that value by the number of units in the subject building.

A building by building comparison of different types of properties would make much less sense.

A GRM (EGIM or GIM) is also useful. While this is typical a tool of the Comparison Approach, for smaller income properties it's an excellent Income Approach. With enough data over time, the range points for GRMs of varying properties can be correlated against one another.