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Appraising A 1906 Home

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Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
We have a very small market of old homes in our area. I just looked at one built in 1906. It's a beauty but needs a total remodel. Lots of water stains, flooring is worn out, 50+ year old wall paper ect. The house is like a time capsule inside. Exterior has been kept up for the most part and is in good shape. Inside is just totally outdated and worn out. The house is worth saving but it is going to take a special buyer and lots of money! The location is excellent and is on a block with several other similar homes.

Cost approach is virtually useless on this one. To old and to much depreciation.

Income data is non existent.

So that leaves sales approach. We have only about 10-15 homes that would be comparable in town and none of them have sold recently, except one that was in excellent shape. I know of one sale that was run down but not like this. But I am sure I will be using it.

I will also search in surrounding areas for older homes that have sold and been renovated. My market area is going to rather large. Huntsville has an active market but I don't think it is comparable in price.

So anyone got an idea I have over looked?
 

wyecoyote

Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
Hopefully you have gone back in time far enough assuming a 12 months. Consider with older homes depending on your market they can have their own market appeal. Here there are several older homes to chose from. From the ones you describe (out dated but worth saving), the worn out, those that have been updated over time, to those recently resotred, and others that have been remodeled. Look at and consider all aspects of the sales and do alot of research. Here a house that has been restored can in some market areas go for more than one that has been remodeled with updated materials. The older ones here at least have a market appeal unto themselves.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
You "neighborhood" is going to be very large :p and it's hard to make a UW happy. :rolleyes: Someone looking for a historic home is generally looking for a specific type or period. Your market search is going to be any small town in the region...... or maybe the whole state. If it's very historically significant, the market search could be even larger.

Couple of resources for info:
http://www.oldhouseweb.com/



This is one of the BEST CE courses I have taken:
http://www.learningrealestate.com/teachers...e_van_buren.htm
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Jeff:

If your local market has been fairly stable AND if there are no fully comparable neaby markets with even reasonable useful sales, I would first consider going MUCH further back in time in an attempt to determine local reaction to condition/influences on value. Even on less 'historic' homes... like as far back as you have to go. Of course then you still have to adjust for repair cost/value differences over time (urrgh) but you ALSO may get lucky and find one or two that you can use to establish a rough percentage of value adjustment! I am not saying use a six year old sale in your report... but you can use the data you acquire for the purpose of establishing subjective adjustments to the comps you DO have to work with.

The problem with the house you describe is that sometimes there IS no similar sales with simlar history/condition, either proximate or timely. So you fish a little here and ask around of agents who have been around the block for more than a few years, and sometimes you stumble on to one good sale even if it is waaayyy old.

Don't drive yourself completely nuts: when it is all said and done the ONLY way someone knows what the house you describe is going to sell for is to sell it.

Then and only then, you got your one really good comp. Sad but true.

All that maudering had a point: IF there is a sales contract on that thing and IF it otherwise seems even remotely reasonable it may be about all you have to go on. Nicey textbook solutions may simply not be available. I have NEVER had an underwriter or LO throw too many rocks at an oddball appraisal in which I fully explained the parameters to which I went to seek comps and then told them "Here's the lousy best I got to work with, I adjusted as best I could, and frankly in my profesional opinion this here value seems reasonable".

Good luck, bet you learn something!
 

Tim The Enchanter

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Not much you can do but use the limited data you can dig up.
Try to have fun with it. Sound like one you won't forget 2 days after it's done. :D
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Unfortunately no one added anything I had not thought of or considered. I appreciate the input however!

Good thing is that is not for a mortgage. Client is the owners nephew. Owner is in her late 80's and could not live on her own anymore. He is cleaning out the house and going to sell it for her. He is just trying to determine an asking price.

The house had some of the nicest antique furniture I have ever seen. I took like 50 photos at the house. My wife was just amazed at the bedroom suit. Headboard must have 9.5 tall with a big velvet canopy. Matching arm-wa and dresser. House was just full of amazing items. It was fun to just walk through and look at it.

Oh yea, and it has honey bees in the wall. They are going in by the chimney. Told the guy the honey was the bee's personal property and I couldn't take that into consideration.
 
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Jeff,

When I do one of the old ones or something else unique and get to the point of having to do a cost approach, I consider replacement only, Not reproduction.

A bedroom is a bedroom. If the property is only being bought to live in replacement cost is the first goal.

If the property is being bought for it's historic value, I find a local contractor who can reproduce the structure with similar looking materals if not actually similar materials. Actually finding a contractor who can produce a bid to do the reproduction is the easy part. Such a contractor would be very good and therefore very busy. The hard part is getting them to complete the document I need. There is of course a fee to be paid. I then use the contractor's bid as the base of the cost approach for reproduction.

Another source I have found useful is the local historical society. They usually can produce a name of someone who has had something to do with a similar project in the past. There is a lot of foot work, phone calls, etc but you can usually find someone who can provide some help. Seldom do all the ansers come from a single source.

Most states would probably have a historic society.

The best advice I can give you is be sure the fee is appropriate, you collect up front, and you KISS(Keep it simple). Don't sit and stare at it.

Most of the ansers I get to tough questions come when I am thinking about or actually doing something entirely different.

Feel free to email me if you wish.
[email protected]

I work in southeast Texas and have done a few older homes over the years. They only become difficult when you worry over them.

Best of luck.

Please join me in a prayer for all those people putting their lives on the line for freedom's sake.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I highly recommend "Appraising the Tough Ones" by Frank E. Harrison, MAI, SRA.

It's available from the AI web site for $35. It's helped me many, many times!
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
B) Not much to add. I live in an area where we have many homes that are as old as the house you are appraising, and many that are much older. I read where someone called this a "historic" home. Old does not mean historic. However, if the home or the area it is located in are historic, that poses several problems. In a historic area there are usually archetectural boards of review, inspections, etc to deal with. A historic property may require even more caution. However, if it is just old, as is often the case, there are less problems. I use only the income and the sales comparison approach. Both are possible as many of these older homes are located near universities and major medical schools and centers and command a good rental income.

I do a straight replacement concept. You cannot duplicate some of the material and workmanship in these older homes as the material and craftsmanship no longer exist. In any cost to cure, it is always based on todays available materials and todays cost. Someone mentioned older comps. Only the client can tell you how far back you can go. There is nothing in USPAP regarding that issue.

I will tell you that a friend of mine was asked to complete an appraisal on Tangier Island. That is a very old community in the middle of the Chesapeake Bay and is oficially in Virginia. When he did the appraisal there had been 1 sale on the island in 5 years. All homes on the island are very old but that was not the issue. There are about 150-200 people on the island and they earn a living from crabbing and fishing and tourist. My friend then used the 5 year old sale, and 2 sales from the eastern shore of Maryland, and 2 from the eastern shore of Virginia. Then he went around the island and interviewed the residents and asked them what they thought the property was worth. On that basis the lender accepted the appraisal and made the loan.

BTW, there is 1 vehicle on the island, owned by the sherrif, a pickup truck. The rest of the folks use golf carts to get around and haul the tourist around. There is no jail. If anyone is incarcerated they are put up in the hotel until the boat arrives the next day(it is a long swim to either shore).

Point is, use what you have, go back as far as you have to, and if the client ask for better comps..............laugh at them :beer:

Don
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I usually approach those houses from the front! :rofl:
 
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