Appraising A House Without Land

[Tim The Enchanter]

Personal property? lol

Just not easily moved?

OK, so that brain wave failed to reach tsunami level.

 

[George Hatch]

I sincerely doubt they want the market value of the structure as if detached from the land and ready for relocation.

 

[Gobears81]

I appreciate Terrel's response. Contributory value sounds like what they are looking for. If the property in fee simple is worth $100,000 and the land is worth $20,000, the improvements contribute $80,000 to the whole. There is nothing wrong with breaking down components of value-that is exactly what the cost approach entails. But if it were my appraisal, I would include the market value of the entire property and in the analysis of the contributory value of the improvements be clear that this value does not necessarily equal the market value of that specific component.

 

[George Hatch]

I think they may need the 1/4 partial interest (or whatever percentage this house is) of the whole.

The definition of value being used will have its own components and assumptions, so the appraiser needs to be mindful of answering the question that's actually being asked.

 

[Don Clark]

We do not appraise properties. We appraise property rights.

In the case you're describing the property rights that go with "just the house" may or may not even be marketable. Partial interest appraisals are a real niche specialty.

Agreed. I have completed 2 appraisals that are similar. One was an appraisal of a house being sold to a long term tenant. The tenant had added 2 rooms(sfla) to the house. The Private Appraisal was so the landlord could sell the house to the tenant under the hypothetical condition that the 2 rooms added by the tenant were not there. The second one was a house where the daughter had added several rooms to her mothers house. The mother was to sell the property to the daughter without the rooms added by the daughter to be included in the value. AO-9, although specific to environmental issues, is also a good guide to any hypothetical condition.

 

[Tom D]

sounds like just the cost approach. each contractor wants to know what they should have been paid for their part of the construction. they are looking for their profit now. how are they going to figure their fractional parts if you give them a total. in this city we have lots of properties where the ground value is zero, this would be easy. seems like a bear trap if you don't do it appraisal right. family members greed may influence how much they think of your competency. lot of good advice given on this one to think about before the bear trap closes.

 

[Deleted member 128537]

The problem I see is that the location is what gives the improvements value, and the location includes the site. So to appraise the house at the location and then subtract out the value of the land really is the market value of the house at that location. Put that house on a different location and you could easily have a different value. So I would definitely put a caveat in the valuation that it is only for the location specified in the report. Should they seek to move the house it would not necessarily have the same value. IMHO.

 

[CANative]

Doing a an appraisal on tribal trust land is about the same thing. Cost approach with some other techniques to get the value of the improvements only. There IS a caveat to this in that the lender has to agree to waive the traditional definition of market value.

 

[Meandering]

You don't have market value for just the house as-is, as of the day.

Because it can't be sold as just the house as-is as of the day.

Unless it is going to be moved.

If it is not going to be moved

You need to know the RIGHTS you are appraising.

Then you need to ask yourself,

what other buyers have purchased similar RIGHTS - NOT HOUSES - BUT RIGHTS.

Actually,

Just forget it.

If you think the house is personal property, you are not competent to even ask the questions needed to do this assignment.

.

 

[Gobears81]

The problem I see is that the location is what gives the improvements value, and the location includes the site. So to appraise the house at the location and then subtract out the value of the land really is the market value of the house at that location. Put that house on a different location and you could easily have a different value. So I would definitely put a caveat in the valuation that it is only for the location specified in the report. Should they seek to move the house it would not necessarily have the same value. IMHO.

The location is what gives the property value, but external obsolescence is explicitly found in the contributory value of the improvements, in addition to inherently found in the value of the land. Someone mentioned that land in some parts of their city has no value, or lets just say $100. Assuming that is a residential neighborhood, maybe houses are priced up to a ceiling of say $30,000, even for the ones that have had adequate maintenance. If the exact house is found in a neighborhood where average land values are $50,000, I can guarantee the contributory value of the improvements are not going to be $29,900.