2 Units Re-Zoned to Condos.which comps to use?

[Let me be Frank]

Property currently zoned DUPLEX with 2 separate dwellings (see Diagram #1 below with Duplex 1 & 2).

ALLEY
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PROPERTY LINE

DUPLEX 2

PROPERTY LINE

DUPLEX 1

PROPERTY LINE
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STREET

Owner is splitting parcels through the city and re-zoning as Condo’s (Diagram #2). The reason they need to zone it Condo vs SFR is only the front unit has street frontage. They are fully remodelled and they look like SFR's, feel like SFR's and taste like SFR's (well, not quite but I was just trying to paint you a picture).

ALLEY
******************
PROPERTY LINE

CONDO 2

PROPERTY LINE

CONDO 1

PROPERTY LINE
******************
STREET


Each will have its own APN and own the land. There is a main street in front of Condo 1 and an alley in the rear of Condo 2. There is also a walkway on the right side along the property to walk from street to Condo 2.

There are no similar “comparables”. Can we use similar size SFR (sf and lot size) as comps as the only Condo’s in this area are either typical attached style Condo’s or Condo Conversions (WHERE THEY DO NOT OWN THE LAND)?

Your thoughts please. Thank you in advance!

 

[Don Clark]

Property currently zoned DUPLEX with 2 separate dwellings (see Diagram #1 below with Duplex 1 & 2).

ALLEY
******************
PROPERTY LINE

DUPLEX 2

PROPERTY LINE

DUPLEX 1

PROPERTY LINE
******************
STREET

Owner is splitting parcels through the city and re-zoning as Condo’s (Diagram #2). The reason they need to zone it Condo vs SFR is only the front unit has street frontage.

ALLEY
******************
PROPERTY LINE

CONDO 2

PROPERTY LINE

CONDO 1

PROPERTY LINE
******************
STREET


Each will have its own APN and own the land. There is a main street in front of Condo 1 and an alley in the rear of Condo 2. There is also a walkway on the right side along the property to walk from street to Condo 2.

There are no similar “comparables”. Can we use similar size SFR (sf and lot size) as comps as the only Condo’s in this area are either typical attached style Condo’s or Condo Conversions (WHERE THEY DO NOT OWN THE LAND?

Your thoughts please. Thank you in advance!

There have been multiple threads on the forum about this issue. Most very recent. Do a search for Condo and you will be busy reading for a week.

This is a very common event in my market. We have condos as small as 2 units, 3 units, 4 units as well as condo developments that are more typical as what some envision as a condo. If possible, use similar condo's that have been converted from something else. Ownership of the land by an individual condo unit owner is common in my market where there are 2,3 & 4 unit condos.

 

[Let me be Frank]

Thank you Don! I will do a search when I have a moment.

We have been unable to locate any similar conversions.

 

[CANative]

I've got something really similar going on except instead of going the condo direction they got the city to add a PD (Planned Development) overlay to the R3 base zoning (high density). This allows them to change the lot size from the required 6,000 sf for SFR's or 1,500 per unit for multi-family down to just under 2,000 square feet for each SFR (1,350 sf, 3/2, two story) with a detached 3 car garage and a "granny unit" above the garage (800 sf, 2/2). There are 4 sets of these and they are "detached" because there is 1 inch between them.

There are no sales of such a critter in that city ever. There is one sale of a similar main unit on a zero lot line but it has a single car garage and no granny. 12 of them and one has sold after being on the market over a year. It sold for about the cost of the proposed construction of one of the subject units (not including the subject land, etc.). The only similar project is one like the sale I just explained (2 story, zero lot line) but it is located 35 miles south in a city in a more urban county. None have sold after being on the market more than a year. They've reduced the price to about what the above one sold for and are offering $30k in some sort of credits.

The only similar project (SFR, garage and granny on zero lot line) which has some sold units is in Santa Rosa, 65 miles south.

I've had the AMC put the project on hold. Even if I could create an appraisal out of spit and bailing wire, marketability cannot be demonstrated. The AMC's client (a big box lender) gave the developer my contact information and he is hounding me. He needs the money to finish another project he's got going on.

 

[Let me be Frank]

The problem I am faced with is I have asked some very "experienced" appraisers and got a different answer each time (many ways to skin a cat scenario). Seeing as I am NOT skinning a cat I want to make sure we do the right thing when appraising this situation. Plus, my cats would take offense if I paid attention to another feline.

The latest is from let's say a VERY experienced appraiser;

"Normally no, but if you have no detached condos or puds, then you may be forced to use SFR or go out farther. You might also use some attached condos".

 

[CANative]

"Normally no, but if you have no detached condos or puds, then you may be forced to use SFR or go out farther. You might also use some attached condos".

My problem with that is that if you have to go out farther, go back farther and use properties which are so dissimilar that they cannot truly be considered competitive, we might be able to put together a defensible value opinion, but is it really Market Value and have we lost sight of the intended use which relies upon marketability?

Note: Assuming this is a mortgage transaction appraisals.

 

[Green Hornet]

Let,

What does the market think? I have some condo develpments around here that look like SFRs. Many of the folks that live there do not consider them condos, but detached SFRs. It does not matter to them what the zoning is. Many think that the condo dues are HOA fees. I have always had comps from inside the project, but if not, I would not hesitate to use an outside SFR.

Also, around hear, some of the taxing authorities show on the tax card actual SF for the unit site. This is for taxing purposes only. At first glance it appears that the unit owns the land, but that is not the case.

 

[Let me be Frank]

This is a purchase.

 

[Let me be Frank]

When I bought a home in Corona yars ago it was zoned Condo due to the lot size. It was in a neighborhood of SFR's and the comps used were SFR comps.

The property we are discussing is in the University Heights area of San Diego and the only condo's in this area are apartment style condo conversions or the older attached condo buildings. The area does have quite a few units that are similar but not condo's.

Once again the only reason it was zoned Condo and not SFR was due to the fact that the back unit does not have street frontage.

 

[Don Clark]

Let,

What does the market think? I have some condo develpments around here that look like SFRs. Many of the folks that live there do not consider them condos, but detached SFRs. It does not matter to them what the zoning is. Many think that the condo dues are HOA fees. I have always had comps from inside the project, but if not, I would not hesitate to use an outside SFR.

Also, around hear, some of the taxing authorities show on the tax card actual SF for the unit site. This is for taxing purposes only. At first glance it appears that the unit owns the land, but that is not the case.

A condominium is a form of OWNERSHIP. It is not based on ZONING or ARCHETECTURAL style. For the 2,999th time on this forum, please, repeat after me....."A CONDOMINIUM IS A FORM OF OWNERSHIP".