Appraising a triplex - no comps?

[Pittsburg_22_m]

I'm having a dilemma here. I've got a triplex I'm working on and expected to have at least a couple of comps but have none. None within 50 miles in the last 5 years. Mind boggling, really. Same for fourplex sales. Nada. I have a lot of duplex sales. I need some help with the sales approach.

I could value per unit based on adjusted prices. But being a triplex, it's 30% larger. If I adjust for differences in room count or GBA, I feel like it inflates the per unit cost.

I'm tempted to back out of the assignment even though it's almost done. But that also wouldn't help me if I face this issue again.

Help, please!

 

[Mountain Man]

Go back in time. You need some type of support for a diminishing return on 3 units VS 2. It's not unreasonable to expect the 2 units to sell for slightly more than 3, but verify with old 3 or 4 unit sales, even if 2 or 3 years old.

 

[Pittsburg_22_m]

Go back in time. You need some type of support for a diminishing return on 3 units VS 2. It's not unreasonable to expect the 2 units to sell for slightly more than 3, but verify with old 3 or 4 unit sales, even if 2 or 3 years old.

It's a good idea but I don't have and 3 or 4 unit sales within 50 miles in the last 5 years.

 

[Bill Tompkins]

Decline the assignment. You don't need the anxiety. Life's too short.

 

[Michigan CG]

If sales don't exist they don't exist. Could you find some 3 and 4 unit properties that haven't sold and talk to the owners about their motivations for those properties and what they would pay vs a two unit?

Talk to Realtors that specialize in income properties?

 

[Lee Lansford]

What does the income approach tell you?

 

[residentialguy]

re-read post 5 & 6

 

[Pittsburg_22_m]

What does the income approach tell you?

$185,000.

Sales per unit is coming up $75,000. That's why I think adjusting the square footage and room count for the additional unit is inflating the price per unit.

 

[J Grant]

With small income property, the income approach can be factored more toward value, I'd use that as a strong value indicator.

 

[hastalavista]

Decline the assignment. You don't need the anxiety. Life's too short.

This isn't bad advice because the alternative to completing the assignment and not getting harangued by the client (assuming this is for an assignment that needs to be consistent with the GSE requirements) will require a lot of work.

The income approach is the logical (I presume if the property is non-owner occupied) method. But the GSE guidelines are really not set-up to do an appropriate income approach given you situation (It would probably require more than just a GRM comparison).

One way to do this would be to find a competing market. In theory, a competing market is one which shares the same demographic/income profile. It would stand to reason that the two areas would reflect similar buyer-seller motivations and similar market dynamics. In theory, there is no distance restriction for a competing market. However, if you've already gone out 50-miles, I'd say you've likely gone the limit anyone would do for a mortgage finance appraisal.

I think I'd pass on this one. My fee would be 5x what I normally charge (which means it would probably be 8x what they are offering to pay).

Good luck!