Appraisal Review

[p14928]

The median sale price of existing homes includes the land and the new construction price includes the land.

 

[p14928]

The median sale price per SF for existing includes land.

("Median Sale Price per SF of Existing with Land x SF of New = $Value new home with land)

 

[Randolph Kinney]

The review was performed by a local appraiser who took interest in a public issue concerning new homes in our area and prepared an "Appraisal Review". I am trying to understand the issue and process. I do not understand how a person uses "sale price per square foot of existing homes to calculate the cost of a new home. I would assume the two ar two different animals. No? In regard to adjusted he is using "median sale price per square foot" of smaller existing homes to caalculate the value of newly constructed homes.

Who is the intended user of this appraisal review? (person or entity)

What is the intended use of this appraisal review? (property tax appeal?)

The appraisal or appraisal review should have the above information.

Also there should be something about the scope of work that was performed and data considered and research conducted and sources necessary to produce same.

There should be a reconciliation of the approaches used, the reliability of the data and what weight was given to each approach to conclude an opinion of value.

Can you give us this information?

 

[Riick]

A cost comparison of something old (depreciated) does not equal to the cost of something new (no depreciation).

Not to mention that COST does not equal VALUE

 

[Michigan CG]

The assignment was to detemine if the orignal Appraiser's appraisal of new home construction was inflated.

I would think it would be much easier to get a Marshall and Swift estimate and add vacant land value. That would give you a good idea of Cost New, but maybe not value. Cost and value are two different things.

 

[p14928]

Mr. Kinney

I am really just trying to figure out his approach which is using ("Median Sale Price per SF of Existing smaller homes with Land x SF of New = $Value new larger home with land)

The Reconciliation is limited to the following statement "the economic concept of economy of scale, indicates that a buyer is willing to pay more on a per square foot basis for a smaller home. The subject property, being larger than the average and median homes sold during this period should command less than the average and median selling price on a per square foot basis."

 

[Randolph Kinney]

Mr. Kinney

I am really just trying to figure out his approach which is using ("Median Sale Price per SF of Existing smaller homes with Land x SF of New = $Value new larger home with land)

The Reconciliation is limited to the following statement "the economic concept of economy of scale, indicates that a buyer is willing to pay more on a per square foot basis for a smaller home. The subject property, being larger than the average and median homes sold during this period should command less than the average and median selling price on a per square foot basis."

Mr. p14928,

I am trying to understand what was communicated in the appraisal review and how that was communicated.

If I understand you correctly, the appraiser listed a number of properties (maybe in a grid, side by side) showing the price paid and the gross living area in square feet. He then computed a dollar per square foot number for each property by dividing the purchase price by the gross living area. He then determined the half way point of the data series to say what the median price per square foot was.

This calculated median price per square foot was then used by multiplying the new home's gross living area to compute the value of the new home.

Were there any adjustments to the selling price of each of the properties used before the calculation of a price per square foot, for example, difference in the number of bathrooms, quality factors, location, age, condition, lot size, etc.?

 

[p14928]

Thank you for your response. No, there were no such adjustments! In addition, the existing homes varied in price, size, type, style, appeal, age...

 

[PropertyEconomics]

The reviewer is appraising by the pound Randolph ...

 

[Webbed Feet]

Thank you -- From a layman's perspecive it does not seem practical to devise a median "sales price per square foot" for older smaller existing homes (of various styles and types) and use that value to calculate the cost of larger new custom homes. The formula being used is simply as follows

("Median Sale Price per SF of Existing x SF of New = $Value of New)

I have to side with P.E.

Your question on the surface may seem simple. But to answer you back expressing some opinion regarding the appropriateness of what the reviewer appraiser did, or did not do, lacking specfic details of the complexity of the assignment due to possible lack of comparable or other possible situations.. would NOT be appropriate of any responder on this forum.