Appraising an outlier properties

[Trihard]

Is the property really an outlier or just overpriced?

 

[J Grant]

I am appraising a property being sold for $300000 The neighborhood, or development in which it is located has a median value of $150000 with one sale at $200000. This is the highest priced comparable sale. After I apply the standard adjustments for site, GLA etc lets say it yields $250000 a value I believe is high for the neighborhood. Do you have any suggestions about what percent adjustment I should deduct for a functional obsolescence ? 10% ? 20% ?
I searched sales for the past 5 to 6 years and typical values have remained relatively stable under $175000
So maybe its possible maximum value should not exceed $220000 or 10% above the highest sale in the neighborhood.
Is there anything written on how to deal with these kinds of properties
I will not go to another neighborhood as I have 3 or 4 comparable sales from the same neighborhood,

I would appreciate your comments

I have no idea what some of this word salad means - is your subject bigger or more upgraded or has a better view - to explain why it got a higher sale price then other similar properties from the same hood? ( assuming the sales you reference are similar )
Are prices rapidly increasing?
If the answer is no to questions one and two, then the subject is not an outlier property; it is a regular property with an outlier price. Which means it will appraise far below the sale price. Which you go on to explain. Don't; invent ext obs to get your value opinion down ( unless there really are functional observations - if so, what does it consist of?

It is what it is- if the market value opinion is 200k or X and the SC price of 300k, reference that the most similar comp sales support the value opinion and the price appears to be an outlier.

 

[Tom D]

Is the property really an outlier or just overpriced?

Either or, it is an existential threat to your license. Because they are going to look at this one very closely. They will have all day to find your mistakes. Then let's see your workfile the state say. I bet you are already thinking, why did i take this one.

I'm not as brave as some here, but a long time survivor.

 

[Fernando]

OP saw the sales price was too high and already had a problem without seeing why it's so high.
Unfortunately, we don't know his/her market and help with what comps or sales to get.
There's always a reason for an outlier.

 

[App601]

Thanks for all answers. I am going to answer my own question and see who agrees and who disagree. I do not know all them. I used linear regression from Excel I deleted the extremes Still i had about 50 comparable sales from the same development and it gave me a low a high range. The low was $160k and The high $220. So if the cost approach yields lets say $240 I will deduct $20k for functional obsolescence Ill try to reconcile The Cost and the Direct salkes approaches based on those numbers

Ask yourself why is there such a large premium over the median price.
I remembered one house which I could have appraised.
It was an over improvement with highest priced if sold but I can see the justification because it was on the waterfront.
I saw the value in the premium but still difficult to appraise.

I agree with you I also appraised a house in the southwestern part of Puerto Rico with waterfront and I used ONE comparable sale from the Northeatern tip. Both houses were Beachfront and surely comparable But in my particular case i is an inland development with access control that price have benn syttable for the past 2 to 4 years

 

[J Grant]

Thanks for all answers. I am going to answer my own question and see who agrees and who disagree. I do not know all them. I used linear regression from Excel I deleted the extremes Still i had about 50 comparable sales from the same development and it gave me a low a high range. The low was $160k and The high $220. So if the cost approach yields lets say $240 I will deduct $20k for functional obsolescence Ill try to reconcile The Cost and the Direct salkes approaches based on those numbers


I agree with you I also appraised a house in the southwestern part of Puerto Rico with waterfront and I used ONE comparable sale from the Northeatern tip. Both houses were Beachfront and surely comparable But in my particular case i is an inland development with access control that price have benn syttable for the past 2 to 4 years

What comprises the functional obsolescence of the subject ?
Why not pick the most similar comps, put them on the grid, adjust for factors, and see where the value is, rather than using an Excel program for 50 sales, some of which may be far less similar?

 

[App601]

Why do you think it has functional obsolescence? Because it sold for $100,000 over the highest priced competitive sale?

You stated in the op that It's in a development, Yes? Is the subject in a PUD? Newer builds?

If the subject is in a PUD, like a condominium, lenders like to see a sale from a competitive development because it provides a broader and more reliable benchmark for evaluating the market value....

Puerto Rico is facing a scarcity of properties and RE agents are asking whatever they want for a specific one. I am the type of appraiser that DOES NOT LIKE to create markets . I prefer to bracket my property and that it appraises whatever it appraises When I get case tike this I act with extreme caution and sometimes use 6 comparable sales to support my opinion of value. In this particular case I found 8 sales for the past 12 months with a range from $122k to $200k The median is $145K

 

[App601]

What comprises the functional obsolescence of the subject ?
Why not pick the most similar comps, put them on the grid, adjust for factors, and see where the value is, rather than using an Excel program for 50 sales, some of which may be far less similar?

You are correct But lets say I do the DSCA Typical GLA in the development is 1000sf If the property has 1700 You have 700 sf more than typical That may be part of the subjects functional obsolescence The subject has a swimming pool. This development of approx 250 houses has only 3 houses with SWP That might be another one.

Linear regression is not the main instrument to support your opinion of values. but it helps a lot as it confirms that SWPs provide little or no value

I have to use all the waapons that I have to explain that this house is not worth $300k Thanks

 

[glenn walker]

Man that's not functional obsolescence and that adjustments just made up. If anything it's Super Adequacy or a over improvement for the area. This is a review coming or a complaint to State Board. If I'm borrower or buyers I'm flipping out.

Finally it Seems like the OP is trying to make up hypothetical adjustments to Drive the Value Down to be similarly priced to the inferior properties. This is what you don't do " appraisers" don't make or create value.

 

[Surf Cat]

Puerto Rico is facing a scarcity of properties and RE agents are asking whatever they want for a specific one. I am the type of appraiser that DOES NOT LIKE to create markets . I prefer to bracket my property and that it appraises whatever it appraises When I get case tike this I act with extreme caution and sometimes use 6 comparable sales to support my opinion of value. In this particular case I found 8 sales for the past 12 months with a range from $122k to $200k The median is $145K

Look.... we would like to help you but can't without more specifics.

I don't know where from my questions you got that I was implying you create your own market. Having said that, you didn't answer a single question I had.

I've stated the below several times on this forum and I'll state for you.

All areas from financing to GLA in the market Grid require components of bracketing and or equality and similarity.

The Subject's site and GLA must be bracketed, subject's bedroom count must have some equality with a couple of the comps, subject's bath count must have some equality with a comp or two, subject's location, age, condition, and views must have similarity.

We still don't know why you consider the subject to be an outlier or why you need to know about functional obsolescence.