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Adult Care Facilities in SF Subdivision

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Tudor

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Aug 15, 2006
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Certified Residential Appraiser
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Arizona
I just received 2 appraisal orders for SFR's, both for the same buyer.

After doing my initial research, county records indicate that one is being used as an adult care facility and the other has been owned by the same adult care facility.

Can I appraise these properties only as SFR? (that is how they were ordered) and then just mention how the properties are being used? Both properties are located in SFR neighborhoods.
 

Webbed Feet

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Feb 11, 2005
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Canada
I just received 2 appraisal orders for SFR's, both for the same buyer.

After doing my initial research, county records indicate that one is being used as an adult care facility and the other has been owned by the same adult care facility.

Can I appraise these properties only as SFR? (that is how they were ordered) and then just mention how the properties are being used? Both properties are located in SFR neighborhoods.

Mr. Slaughter,

Why don't you appraise a chicken farm as if it is SFR and then just "mention" how it is really being used?

Bottom line is these ugly puppies fall between the cracks due to federal law allowing them to operate in SFR neighborhoods. BUT that does not mean the structures were not originally built, or have been too far converted, to a special use structure beyond a point where they are no longer acceptable to the SFR market. Or they are in fact a "mixed use" facility that are not acceptable to all sorts of different lenders due to the mixed use.

So... number one ... You'd be one smart cookie to immediately inform your client what you know, and require a SOW that starts with just an improvement inspection with an agreed fee just for the inspection only and possible "Letter of Findings" back to the client if you slam into a special use property. Next, this is a fun one too... All involved parties have to get it through their fat heads that the "business value" is NOT a part of the real estate being appraised. (This fun little item shows up in sale prices $50,000 to $250,000 higher than similar SFR houses.) Facts are, you may have to have HC's or EA's in order to proceed with an analysis. Regardless of being located in a SFR neighborhood the improvements could be commercial and only have a commercial market. These are complex assignments. In some cases these structures bring a premium price that a similar SFR structure cannot obtain due to the Adult Foster Care structure has met J.A. fire codes that no SFR house has to meet. (Another fun fact that can be found when in order to get an adult foster care license the building has to meet fire codes not required by SFR houses due to the occupancy levels. So AFC operators will pay more to obtain a building already in compliance with the fire codes.) So you have possible complex H&BU to consider.

To top it off, half the clients will be wanting a fraudulent appraisal report out of you so you don't screw up their nice little SFR loan they are going to attempt to sneak past the lenders. I double dog dare ya to explain to underwriting your subject's 12 bedrooms and 10 half baths, versus your comps typical 6, 3, 2.0 configuration while you attempt to claim the subject is still SFR.

Webbed.

P.S. Don't forget to demand that nonrefundable fee for excess research time this is going to take... regardless of if any appraisal ever gets completed or not.
 
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PropertyEconomics

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Jun 19, 2007
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Certified General Appraiser
State
New Mexico
My experience with these has been that they are located in SFR neighborhoods, are former single family residences, and here, at least, must continue to comply with zoning requirements in which no more than five people who are unrelated can occupy the home.
Im sure there are some special items, ie hand rails, etc. which have been installed and may require removal and repair before the home could be used again as a single family home.
I dont take the dire position as Webbed has as 10 bedrooms and 10 half baths has not been my experience among properties like this. I live in a subdivision that is about 30 years old and over the course of six streets in my neighborhood there are three of these homes. They have not decreased value in the neighborhood and other than having to call a few times about exterior maintenance, they have been pretty good neighbors.
Passing judgement before you do your physical inspection is not wise as there is no way to tell whats there until you see it. Its obvious you are not appraising a chicken farm ... but Webbs point is well taken if not just a little bit exaggerated.
Inspect and then decide.
 

ZZGAMAZZ

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Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Would you feel the same way if an appraiser conducted an inspection of your home and called it out as as a home business rather than a SFR because you as an independent contractor were working out of a corner of the bedroom?
 

Jennette Picinich

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Apr 24, 2006
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Licensed Appraiser
State
Arizona
Would you feel the same way if an appraiser conducted an inspection of your home and called it out as as a home business rather than a SFR because you as an independent contractor were working out of a corner of the bedroom?

I don't think that's fair. Some of these places are nothing more then single family homes that have been slightly modified, while others are just as Webbed described.
I agree with Property Economics - Inspect then decide
 

David Wimpelberg

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Mar 30, 2005
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Certified General Appraiser
State
New York
Can I appraise these properties only as SFR? (that is how they were ordered) and then just mention how the properties are being used? Both properties are located in SFR neighborhoods.

Well, technically yes, but it would always be appropriate to do so.

Basically, as others have already noted, it depends. What's the HBU, is the use transferable, etc.
 

ZZGAMAZZ

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Jul 23, 2007
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Certified Residential Appraiser
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California
JP: I agree wholeheartedly. As always one knows little about a property prior to the inspection. Modifications might be considered as upgrades with similarly improved SFR's necessary as comparables, although I've done a dozen SFR's being used as adult care facilities without any modifications whatsoever.

I sometimes run into a similar dilemma when I appraise a SFR that's been modified for personal hadicap use--ramps, lowered shower stalls, light switches at wheelchair level, etc...
 

Jennette Picinich

Sophomore Member
Joined
Apr 24, 2006
Professional Status
Licensed Appraiser
State
Arizona
JP: I agree wholeheartedly. As always one knows little about a property prior to the inspection. Modifications might be considered as upgrades with similarly improved SFR's necessary as comparables, although I've done a dozen SFR's being used as adult care facilities without any modifications whatsoever.

I sometimes run into a similar dilemma when I appraise a SFR that's been modified for personal hadicap use--ramps, lowered shower stalls, light switches at wheelchair level, etc...

Agreed!:flowers:
I've also seen a bunch of these properties, however in my case more were atypical then typical. You just can't know until you've seen them.
 

Doug Trites

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Oct 17, 2007
Professional Status
Certified Residential Appraiser
State
Michigan
I have completed a number of sales for foster care homes and have seen them both ways. One of the things not noted in this thread is that at least in Michigan, Foster Care licenses for the person like Appraisers license, not the structure. In as much, no value can given to business value orassigned to the license.

As web has stated, I have found the larger Foster care homes with over six occupants, in most cases have been modified in a manor that is not normal for a single family home. This can be addressed by a cost to cure.
 

Lee in L.A.

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Jan 24, 2002
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Certified Residential Appraiser
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California
The ones I've done have been regular houses being used as board and care facilities. Empty it out, take the numbers off the doors and other signs down. It's a regular house with some overimprovements like exterior doors for all bedrooms, and wheelchair ramps. :shrug:

Now if it's 12 bedrooms and 10 baths off a central hallway, with a commercial kitchen and big dining room, we have issues. :rof:

Of course there's in betweens. Non board and care houses with a bunch of small rooms and a weird floor plan. Perfect for the extended family. :leeann:
 
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