Am I Wrong About Churches?

[Terrel L. Shields]

http://www.homeappraisalsinc.com/sample-complete-summary-appraisal-report-church/
http://www.thegrotonline.com/wp-content/uploads/2011/09/AveryAssociatesAppraisalChurch.pdf
http://www.commercial-appraisals.com/10333-10337mastboulevard.pdf
http://goldenislesbaptist.org/wp-content/uploads/2014/12/church_building_for_Bill_Gross.pdf

I've always read and been taught that church appraisals are best valued by the cost approach and only in the face of good sales data would you not weight cost and in any case, both are traditionally done at a minimum and typically the income approach is not really going to take you where you ought to go...above are all on line. Curious what you see churches sell for and are they without functional/external influences? Physical depreciation is never adequate from my POV to account for all the obsolescence in sales. Note in the first one, the appraised value is almost triple its sale price in 2003 but we don't know when the report was done.

And please don't argue over whether they are churches or "house of worship"...I could give a rat.

 

[RSW]

The last church I appraised was in Southern West Virginia back in 1993. I appraised 2 that year. Believe it or not, I actually had sales to work with. I also used the M&S commercial cost guide, too. No big deal back then. I think I would have problems now unless I could find good sales.

 

[Michael S]

I've never appraised one but just looking through sales in the local commercial MLS and CoStar it's very rare to ever see one listed for sale, let alone actually sold. I see a fair amount of them leasing space in other commercial buildings but sales seem to be rare. Could be regional as Catholicism is pretty dominant here so you don't have as many Protestant congregations looking to buy or sell a church.

 

[Mr Rex]

I don't do churches, but I see them in strip malls, older downtown commercial districts, in older larger malls where the former anchor (WalMart, large grocery chains) have left etc so maybe the income approach would be appropriate in some cases

 

[Eli]

Churches thrive on location. Both cost and sales comparison are good. Land value is very important along with H&B use. I specialized in them somewhat many years ago. When a lender starts really trying to get church business, they will go after all of them in a market. In a rural market, you'll likely rely heavily on the cost approach. If there is anyway you can hookup with a broker who specializes in selling them, they are priceless in finding you comps and some will even share the appraisal. It has been so long since I did one. Seating is very important along with amenities like recreational facilities, baptismals, quality of construction, age, parking, traffic exposure or visibility, condition.

I would even use as similar of sales in nearby metro area for a rural church if you can find them. In metro areas, a broker or two usually dominate in getting the listings.

I would go pull an old file and give you more but I have destroyed and deleted the files it has been so long.

 

[NachoPerito]

We have plenty of sales around here and the information constantly shows that the Cost overvalues these property types. Especially now with there being less Christians in the Pacific Northwest.

 

[Terrel L. Shields]

I am not working on one presently but was PM'd by someone who is. I've done two and have sales, but all my sales indicated a high amount of functional obsolescence related to design and square unadorned red iron buildings have the least functional obsolescence because they are readily available for converting to other uses.

 

[Eli]

I am not working on one presently but was PM'd by someone who is. I've done two and have sales, but all my sales indicated a high amount of functional obsolescence related to design and square unadorned red iron buildings have the least functional obsolescence because they are readily available for converting to other uses.

You get to doing a bunch and you find out many commercial zoned properties go back and forth on H&B use over their life.

I miss the departure rule on an assignment like he has. He can spend a looooong time finding sales.

If you specialize in them, data just accumulates in house.

 

[NachoPerito]

One of the brokers in the Pacific NW at a place called Church Advisers (Colliers) is Steve Pelluer, former NFL QB for the Broncos, Chiefs, and Cowboys. He actually has been helpful in the past.

 

[Burney Lightle]

The conundrum with churches is that if you have enough sales to extract and all forms of obsolescence, you probably can do a SCA...

The question is, how can it be a reliable cost approach without coming up with some market evidence for depreciation or obsolescence...that is why we do not do them...