Am I Wrong About Churches?

[Terrel L. Shields]

The older ones sold for about $15-$20/s.f., the newer ones about $60/s.f. with some in between.

Same here. I just am reluctant to not apply the cost approach as well as sales. It is 'traditional" even when sales are well supported.

 

[Michael S]

Here in the heart of the Bible belt there are a lot of church sales.

I've appraised 6-7 over the years, smallish size (10,000 s.f. or less) and usually older, 20-40+ years. There's a lot of comps so a SCA is reasonable and credible.

Its surprising how fast some of them sell when listed. There's always a splinter group breaking away from a large church wanting to start their own.

Alternate uses for some have been: Day Care facility, Wedding chapel, and one was converted into a Town Hall. These were the old ones that suffered from a lot of various obsolescence. The older ones sold for about $15-$20/s.f., the newer ones about $60/s.f. with some in between.

I was talking to a guy when I was doing some Army training a couple of years back and he made a joke that I didn't really get since I was raised Catholic. "Lets make like a Baptist Church and split". The Catholic church we attend now was built about 5 years ago at a cost of around $175/SF according to the building permit ($3.8 million for about 21,600 SF). This was due to outgrowing the old church, which was the new church as the old old church is now the rectory/offices/classrooms. If the land and site improvements were included it probably had a cost new of at least $200/SF.

 

[leasedfee]

Here there is an ample supply of churches of all sizes; you can even choose sometimes which portion of the metro area you want to draw your comparable sales from. The Mainline congregations, once they burn through their endowments, become non-denominational churches. I appraised one where it was a satellite and they stream-in on big stream what the parent church's pastor was saying. Not sure how long such a model would last -- my mother would not like that. There is a constant expansion and contraction of various congregations. Central (i.e., older) Denver churches become Buddhist temples. In central Denver, conversion into residential condominiums is frequent too, and one is a popular dance club, called The Church. Think it was Methodist.

Cost approach works well -- and bracing myself for some pushback from Forumites -- have found a 5% entrepreneurial incentive for coordination is reasonable and appropriate. It reflects the hurdle where the pastor becomes the "developer" and assembles a team of experts from their congregation: a lawyer, an architect or building expert, an accounting/banker type; a fund raiser person. With the consummation of the efforts to bring a new building to fruition, they immediately cease this enormous effort. The approaches reconcile strongly when handled in such a manner. The analysis of the land valuation is the trickiest aspect, and that is what deserves an experienced appraiser.

 

[Tim The Enchanter]

I see it clearly now. For the moment.
Churches are commercial enterprises. Businesses.
The Catholic church being one of the most successful, monetarily.
Good luck with the income approach.
Peace, brothers and sisters.

 

[Eli]

If you find a niche in the church market, you will develop relationships with brokers who specialize in churches, church leaders, builders, etc and you will get more referral business and market data than you can shake a stick at.

Again, like others have emphasized, highest and best use both "as if vacant" and "as improved" is crucial. So land value "as if vacant" is crucial. Alternative uses "as improved" are too considering costs to convert if it has a different highest and best use as improved.

 

[Terrel L. Shields]

reflects the hurdle where the pastor becomes the "developer" and assembles a team of experts from their congregation: a lawyer, an architect or building expert, an accounting/banker type; a fund raiser person.

The building committee meeting

 

[leasedfee]

The building committee meeting

LOL, sounds like you've been on the Building Committee Terrel. . . .. at the end of it, committee members conclude the pastor isn't as holy of a man as when they gazed up at him in the pulpit.

 

[Tim The Enchanter]

When I was a kid our church built a second bigger sanctuary attached to the first one.
Had plans for a third that never got built. I should ask my Dad. He was a trustee and deacon at various times back then.
Anyway.

 

[glenn walker]

The income approach on a church is really appraising the pastor. Look at the Chrystal Cathedral in Garden Grove California as long as people were coming in by the thousands to hear Robert Shuller the banks kept making multi million dollar loans. Then by about 2000 his congregation was mostly older folk's and attendance was declining year after year. Fast forward the board panics lets the founder go and ends up filing BK. The Catholic Diocese ends up buying the Chrystal Cathedral for substantially less than appraised value and about 1/4 cost new but they are not dependent on 1 pastor like many of the non-denominational churches.

 

[glenn walker]

The income approach on a church is really appraising the pastor. Look at the Chrystal Cathedral in Garden Grove California as long as people were coming in by the thousands to hear Robert Shuler the banks kept making multi million dollar loans.Then by 2000 his congregation was mostly older folk's and attendance was declining year after year. Fast forward the board panics lets the founder go and ends up filing BK. The Catholic Diocese ends up buying the Chrystal Cathedral for substantially less than appraised value and about 1/4 cost new but they are not dependent on 1 pastor like many of the non-denominational churches.