Appraising an outlier properties

[glenn walker]

If you operate your appraisal business out of your home and use the bedrooms as offices for your assistants, you still have a single family home.

If I load up my car with 8 people to drive someplace it's not going to become or be reclassified as being a Commercial Charter Bus it's just another car full of too many people. Just evict the guests and or passengers and you have a house and just a car.

 

[J Grant]

If you operate your appraisal business out of your home and use the bedrooms as offices for your assistants, you still have a single family home.

If I load up my car with 8 people to drive someplace it's not going to become or be reclassified as being a Commercial Charter Bus it's just another car full of too many people. Just evict the guests and or passengers and you have a house and just a car.

It brings up the issue of value in use vs market value.
Value in use means getting extra income from your car by driving for UBER, or from your house by taking in roommates or renting it STR. But on the open market, it is a house compared to other houses and a car compared to other cars. Someone could value the income stream, of course.

There is a differential wrt autos vs real estate in that real property is fixed location, and some areas such as resort areas or hip urban areas have more short-term rental appeal - which gets baked into the prices of these properties.

 

[glenn walker]

It brings up the issue of value in use vs market value.
Value in use means getting extra income from your car by driving for UBER, or from your house by taking in roommates or renting it STR. But on the open market, it is a house compared to other houses and a car compared to other cars. Someone could value the income stream, of course.

There is a differential wrt autos vs real estate in that real property is fixed location, and some areas such as resort areas or hip urban areas have more short-term rental appeal - which gets baked into the prices of these properties.

A spot on analysis.

 

[App601]

My post was not to point out your mistake ( I never cared about that)

My point is that the house is still the same house, whether it is vacant, occupied by an owner, or used for Airbnb/STR.
It does not become a "commercial property" simply becauwe someone rents it STR.

An appraiser can value the STR lease income if they want. And if that type of property is in demand for STR use, it is baked into the price. But it remains a SFR. HBU is residential. STR is still residential .

I disagree The H & B use says that it is the use that brings the maximum value to the property
The present zoning allows STR, therefore you have to appraise it by comparing it to STR properties not strictly residential
It is not the appraiser decison to appraise the business income It has to be requested by the client, if he wishes so and at an extra cost.

 

[Tom D]

You all have convinced me that i need to give it back, if i took it. Too much of an existential threat if i make a mistake.

 

[J Grant]

I disagree The H & B use says that it is the use that brings the maximum value to the property
The present zoning allows STR, therefore you have to appraise it by comparing it to STR properties not strictly residential
It is not the appraiser decison to appraise the business income It has to be requested by the client, if he wishes so and at an extra cost.

The present zoning may allow STR ( allow it specifically, or not prohibit it?) , - either way, the majority of homes in subject subdvision are used for single family occupancy, correct? They are not all renting them out for STR. Not every buyer for the subject might want to rent it as a STR.

If you choose to only compare it to properties used for STR that is a choice-I might compare it to both.

 

[ZZGAMAZZ]

A spot on analysis.

JG [only]. My recent re-fi assignment was a 4000 sf SFR on an acre in an exclusively residential neighborhood, wih a 2-unit residential income-producing detached ADU. Is it possible to briefly explain to me how, or if, value-in-use would be determined by the "duplex," and how that Opinion would affect the opinion of the real property, per se. Also, would a lender working with an AMC usuaally be expected to order both types of values? And, can both values be used in an appraaisal going to secondary marrket?

 

[Mark K]

JG [only]. My recent re-fi assignment was a 4000 sf SFR on an acre in an exclusively residential neighborhood, wih a 2-unit residential income-producing detached ADU. Is it possible to briefly explain to me how, or if, value-in-use would be determined by the "duplex," and how that Opinion would affect the opinion of the real property, per se. Also, would a lender working with an AMC usuaally be expected to order both types of values? And, can both values be used in an appraaisal going to secondary marrket?

Sorry, not JG here, but value in use is not the same as market value. AFAIK, the secondary market wants market value appraisals. And no, they wouldn't order both types of reports.