daven
Freshman Member
- Joined
- Feb 28, 2008
- Professional Status
- Appraiser Trainee
- State
- South Dakota
I have just accepted and order to appraise a property which was used as a "medium grade" clandestine labratory. I am curious to others' approach in the valuation process. Just a few bits of info for sake of argument, numbers are just that and do not reflect the actual numbers. There is signed purchase agreement for $100,000. The house sold for $132K 5 years ago. The house was appraised 2 years ago for $142k. The sheriff's sale and sheriff's deed was transfered at $112k. Seizure date was just over 1 year ago. Without looking into this too far, I am interested how others would approach this situation. Consider the property is in a market were clandestine labratories are not common place, the entire state has 7 known properties on the DEA's list of known labratories. Obviously it is impossible to derive any markets/value trends from a matched pair analysis. So ultimately your are adjusting for a Stigma, and my question is how do you put a value on that. And where in the report to you adjust. I am currently considering two different approaches... The first one would be to extend my radius of properties to one mile so I can "bracket" my comps as close to the subject as possible. If... if the final numbers are 30k higher than the purchase price then I could adjust 20k-30k for the stigma. This is an arms length transaction, all parties involved are aware of the properties history/stigma (including the secondary market lender). There would be full disclosure in the appraisal regarding the clandestine lab including a certification of professional cleaning of the entire property.
The second one would be to list the property as Fair-average and adjust there for the stigma. And of course full disclosure.
I've read other threads regarding "Meth Labs" and everyone seems to get sidetracked with opinions so it is hard to get anything out of those. All your input is greatly appreciated.
An interesting note: the subject is located Literally 1/2 a block from a Middle School and 1 1/2 blocks from an elementary school. Crazy Huh!
The second one would be to list the property as Fair-average and adjust there for the stigma. And of course full disclosure.
I've read other threads regarding "Meth Labs" and everyone seems to get sidetracked with opinions so it is hard to get anything out of those. All your input is greatly appreciated.
An interesting note: the subject is located Literally 1/2 a block from a Middle School and 1 1/2 blocks from an elementary school. Crazy Huh!