appraising an octagon home

[cassie everett]

Help!! I cannot find any comparables for this octagon home. How do I even go about appraising it? It is in a rural setting can I use homes in a rural setting, that may have a spanish design, or a unique design?? Just not sure where to go or what to do?? Need assistance, :?: suggestions please..

 

[airphoto]

Cassie,

My Two Pennies:

Use unusual (contemporary, or some such) homes and lay out your grid. See how close the spread is after adjusting among the comparables, then test if a 'nominal 5.0% adjustment' of sales prices might be useful. If you have an actual basis, use it, rather than the 'nominal 5.0% adjustment.' If there's no suitable market data to rely on .. state so, and move on!

 

[kimcha]

Hi Cassie,

First of all, don't panic. I did one of these geodesic homes a few years ago, and they are not that difficult. Obviously, there are most likely no homes like it in the market that have sold. So, I used unusual homes, like a log home, a salt box style, and an earth home, you know, built underground with a walkout front above ground. I found very little resistence in the market for these types of homes, and in fact they may have a little advantage in the market, at least in my area. I found the toughest part was doing a cost approach, and that took a call to Marshall and Swift, for a few answers. In the comments you just have to explain that there are no like comparables, your perception of any marketability problems, and your rationale for using the comparables you found. Just remember, when it is all said and done, how can an underwriter argue with your rationale, when the underwriter has probably had no experience with octagone homes either.

Best of Luck, Chuck

 

[Judy Whitehead (Florida)]

Also, can you track any sort of sales history of the subject home - in other words has it sold in the past and did it sell for more each time, and how much more. Did the increase in sales price correspond with other more conventional homes in the same market area? Did it sell for approximately the same thing that other conventionally built homes sold for at that time?

If you have an MLS in your area (even if you don't belong perhaps a MLS member would help you with some research) they can usually plug in key words like "octagon" and do a search that way. Actually, I don't know if a "comp" just because it was "different", such as a log home would be competitive with an irregularly shaped home. We have a few octagon houses in this county, including at least one or two on waterfront canals. If the floor plan is functional and it isn't too weird, I don't know but what I would use regular homes in the same neighborhood or market area.

 

[Tim Hicks (Texas)]

I suppose you mean a geodesic home. A geodesic (dome) home can have more than eight (octagon) sides. Typically they have two to three stories and the upper floors are smaller than the lower floors. Never appraised one.

Just kidding. I just inspected one Monday. It was a 1950 frame home with a geodesic addition in 1970. The total SF was 3,784 SF living area. The second floor was a perfect 41 foor circle. This home was in the heart of Bedford, TX and suburb of Fort Worth with typically 0-30 year old brick homes in the range of $100-250,000. The typical frame home in the area is 900-1,300 SF and a typical 3,700 SF brick home is $250,000+. Needelss to say, what an ugly report with no sales within FNMA guidelines. I hope your experience is as nurturing as mine.

The geodesic home market is very limited and comps will be scarce. The other's advice about using other "unique" home designs is the best advice you can use. I would attempt to find one geodesic home sale regardless of how long ago sold. Fortunately, we search up to four years back on MLS here. The trouble is, many times the agents don't know what to call it and don't input it correctly. Just do the best you can. If they con't like your report or your comps, tell them you will consider any sales they would like for you to consider. Put the ball in their court to furnish something better.

 

[Neil (Texas)]

Fannie Mae Guidelines Section 406.02 Selection of Comparable Sales

"... If a property is located in an area in which there is a shortage of truly comparable sales - either because of the nature of the property improvements or the relatively low number of sales transactions in the neighborhood - the appraiser might need to use as comparable sales properties that are not truly comparable to the subject property or properties that are located in a competing neighborhood. In some situations, sales of properties that are not truly comparable or sales of properties that are located in competing neighborhoods may simply be the best comparables available and the most appropriate for the appraiser's analysis. The use of such properties is acceptable as long as the appraiser adequately documents his or her analysis and explains why these comparable sales were used (including a discussion of how a competing neighborhood is comparable to the subject neighborhood). ..."

On occassion I place this reference in an appraisal report and then go on with comments explaining the situation and circumstances.

 

[Dee Dee]

I agree with Kimcha's post, with the exception of using a log home as an unusual construction. In my market area log homes sell for higher prices per square foot than traditional stick built homes, whereas a dome or unusual looking contempory design will usually be less marketable. A-frame's are the most comparable as far as market response to geodesic domes in my area.

Best thing to do is to analyze price ranges for specific construction types in your market area, take a good look at how well built and what your gut feeling is as far as market response to the design you're appraising, and go from there.

If the home is not a dome, but an eight-sided home without the rounded top that is the trademark of geodesic design, then use a traditional stick built design that is as close as possible in proximity to the subject for one comp, then some other contemporary looking designs for the other two comps.

 

[Anonymous]

Know how to appraise a unique home.

You nique up on it.

Wanna catch a tame house?

Tame way.

Seriously, UWs will each chew up. And I am tried of being et. Dome home problem. Try to find unique houses. If you find only one....don't use it. Save it back. Use 3 convetional homes, then when the UW insists they need a unique comp, spring that on them! That seems to be the game they want to play. If you use it, they are just going to ask for another one.
ter

 

[Joker]

I have had good luck appraising unique homes by abstracting the improvement value of the sales. Often, but not always, unique homes are on expensive lots. Usually, by abstracting the contributory value of improvements, I have found that the sales prices are not far out of range.
For example:
An octagonal home with 2000 s.f. sold for $120,000 (lot value is $20,000)
A geodesic dome with 3000 s.f. sold for $200,000 (lot value is $50,000)
An A-Frame with 1500 s.f. sold for $85,000 (lot value is $5,000)
If you take the land value out of the sales price you will see that the sales price per square foot is appriximately $50. Even though the unadjustd sales price ranged from $85,000 to $200,000, the home are comparable and can be adjusted appropriately.
Unconventional but "desperate times call for desperate measures"