Adjusting the Unusual

[RSW]

I would think it may be an overimprovement or a superadequacy. Something like a solar panel. The presence of it may be neat but, the cost for the maintenance may be a burden.

 

[Steer]

Ditto Mike.

I had one here on a 150 year old farmhouse, and the lender agreed to have it mentioned in the report but not valued. No problem, Hypothetical Condition and out the door.

 

[Louis Pompeo]

Market Value v. Value to a Specific User

"So, if one of our primary goals is to not be misleading, and you believe there's a difference even though you cant prove it, shouldn't we be making an adjustment, some adjustment, even if we cant prove the magnitude of it?

I mean at the very least you could say "There's no direct market support for an elevator...yada, yada, yada. But since the elevator obviously has value, it was adjusted based on typical Installation-cost/market-value rates for other high value unusual amenities like pools, excessive garage/shop space, etc, etc.

Just seems like doing nothing is more misleading than doing something with minimal basis."

The ultimate question is "What will the matket pay for it?" - not "What will a handicapped person pay for it?"

If the immediate market area does not require elevators in SFR's, than you have a superadequacy, which is a subcategory of Functional Obsolescence.

As has been said above, you can not recognize it (adjust), or you can even penalize the property (probably a 'cost to cure')

I would probably do the former.

 

[Marcia Langley]

Occasionally, there may be no similar or truly comparable sales for a particular property--because of the uniqueness of the property or other conditions. In such cases, the appraiser must use his or her knowledge and judgment to select comparable sales that represent the best indicators of value for the subject property and to make adjustments to reflect the actions of typical purchasers in that market.

Actually, this supports the notion that there must be a market in order to make market based adjustments.

If there are no sales of houses with elevators it would be a superadequacy.

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[Jungle Boy]

If you cannot prove an adjustment, then consider the following.

Who is the typical buyer in the neighborhood? Is it a family with kids, or are we talking about 55+ type area? If it's a family neighborhood, then odds are that without proof, you can forget about an adjustment.

Another scenario - are all the houses in the area 2-story? If so, how far would someone have to drive to buy a ranch house? Since many people don't like climbing stairs, you may have a case for an adjustment if there are no ranch alternatives in the neighborhood.

Something else to consider, what value range are you talking about. Is the subject in a high-end area. If so, an adjustment could be argued, since many high-end houses (new construction) have elevators - I'm assuming on this one only, based on our neck of the woods, I mean beach.

 

[Flakey]

I suggest you look harder for more data. I am seeing more elevators in high-end homes and vacation rentals. The additional cost (typically $15,000-$20,000) is relatively insignificant in a $1,000,000+ property. A leasing agent on Folly Beach, SC has 5 rentals with elevators that stay rented. The low vacancy rate more than justifies the cost. In two of the rentals, the elevators were add-ons just for this reason. Boomers are aging and we do like our comforts.

Homes with wheelchair accessable features like elevators, kitchens, showers, doorways and ramps do have appeal to a portion of the market and can have added value.

Contact realtors and builders who specialize in older clients. Get in touch with the local ALS Society (www.alsa.org). They are a very active in helping members with accessability issues and will be happy to help. Call the manufacturer of the elevator in your subject. You should at least be able to describe the features of the eleator in your report and while your at it, ask them who they are selling elevators to.

 

[Mike Garrett RAA]

Another thing to consider is "reasonableness". I doubt an underwriter would disallow an adjustment if it was resonable.

 

[Metamorphic]

The ultimate question is "What will the matket pay for it?" - not "What will a handicapped person pay for it?"

The "market" doesnt buy anything. Individual buyers do. Some, not insignificant portion of the market, is handicapped and will presumably pay more for a house adapted to their use. Provided the adaptation does not create a dis utility for regular users sufficient to drive down demand for the house there should be a net positive effect. Even for the non handicapped buyer there's still utility. Do you ever have house guests that are handicapped or old and infirm? I do. Have you ever seen a family that has all stick shift cars and somebody breaks their foot or tears something in their knee? That's why I've always tried to keep a automatic in the stable. Paying an extra percent or 2 over the price of a comparable property would seem to be a reasonable insurance against unforeseen disability. Think of it this way.... What's the unrecoverable costs you'd incur if you sold a 2 story and bought a comparable 1 story assuming the houses were the same price? You've got agent commissions, appraisal fees, loan processing fees, moving costs, and a 100 hours of your time at least. You're talking 5-10% at least.

If the immediate market area does not require elevators in SFR's, than you have a superadequacy, which is a subcategory of Functional Obsolescence.

Just because is not required does not make it a functional obsolete super adequacy. There's lots of not required luxury items that we regularly value.

As has been said above, you can not recognize it (adjust), or you can even penalize the property (probably a 'cost to cure')

I would probably do the former.

The above makes me thinks that maybe the first stab at valuing an elevator would be to look for a price differential between 1 and 2 story homes.

 

[Mike Boyd]

If you can't prove it...don't adjust for it. Just say you have no basis for an adjustment based on paired sales analysis.

I agree with Mike G. If you have no proof of market acceptance, there may be little or no demand.