Appraising Duplex -no Comps

[JGuerrera]

I am appraising a Duplex/2-Units, single building, conventional Loan -purchase transaction.. I could only find just two sold/closed sales of duplexes within entire county going back five years. My question; can I use a triplex as third comp? If so, any thoughts on how to adjust triplex based on sale comparison approach.

Appreciate your thoughts and help...Thanks

 

[Skeletor]

Value/dwelling unit is your best friend in this situation. And, yes, a triple will work when all else fails. At least you have two duplex sales. Also, you can consider other counties/cities if general demographic and economic characteristics are similar to your primary market.

On a side note, investors are buying income and not necessarily the property if you know what I mean. And so they don't necessarily care where that income is located but, rather, how productive that income is. This is of course reflected in the GRM. And so if you pull in a comp from another market that has a nearly identical income profile as your subject and with a GRM similar to what you are seeing in your market....well guess what...it is potentially a valid comp. Don't be afraid to step outside the box on multifamily appraisal. Best of luck on it. I've been there believe me.

 

[JGuerrera]

Value/dwelling unit is your best friend in this situation. And, yes, a triple will work when all else fails. At least you have two duplex sales. Also, you can consider other counties/cities if general demographic and economic characteristics are similar to your primary market.

On a side note, investors are buying income and not necessarily the property if you know what I mean. And so they don't necessarily care where that income is located but, rather, how productive that income is. This is of course reflected in the GRM. And so if you pull in a comp from another market that has a nearly identical income profile as your subject and with a GRM similar to what you are seeing in your market....well guess what...it is potentially a valid comp. Don't be afraid to step outside the box on multifamily appraisal. Best of luck on it. I've been there believe me.

Well Said and thank you for your response..

 

[JGuerrera]

Well said and thank you for your quick response...helpfull

 

[Rick Stillman]

That's an interesting question. What do we do when we don't have exact comp matches? I've never encountered that before.

 

[Carnivore]

Value/dwelling unit is your best friend in this situation. And, yes, a triple will work when all else fails. At least you have two duplex sales. Also, you can consider other counties/cities if general demographic and economic characteristics are similar to your primary market.

On a side note, investors are buying income and not necessarily the property if you know what I mean. And so they don't necessarily care where that income is located but, rather, how productive that income is. This is of course reflected in the GRM. And so if you pull in a comp from another market that has a nearly identical income profile as your subject and with a GRM similar to what you are seeing in your market....well guess what...it is potentially a valid comp. Don't be afraid to step outside the box on multifamily appraisal. Best of luck on it. I've been there believe me.

Good Advice....I might add something that would aide the OP.. I use the Census track info by comparing the Subject track to a potential comparable's track.

This is not perfect but it is something you can point to for a reader questioning your choice.

 

[Sid Holderly]

In past appraisals on multi-unit houses, duplexes, tri & four, etc in small town rural areas the $/sf over a wide range of building types has been more uniform than other comparison factors (units, rooms, etc).
When you do not have much to use go further out and back, but in similar markets. I occasionally do this kind of work for local banks, but will not for AMC's because of the endless stips for bracketing that is impossible for them to understand. The reviewer is in a building with more people than the local County has.

If it is a rental type property use, use rental type comps, set up a spreadsheet and find out which descriptive factor has any uniformity or curve that an analysis can be made from. In my local area you are never going to have more than one quasi-similar comp for any multiunit. Go twenty mile to the city and comps are not a problem, but they do not compare to the local market.

 

[Mike Kennedy]

for consideration

1. who is/are the typical buyer/buyers in the local market for the property.
2. retro 1-5 year research indicates the HABU is ___________________.

 

[KHS445]

The majority of my small multi-family work comes from two communities. In the past I have used SF, # of units, etc. I found GRM to be one of the steadiest and easiest to present methods of valuation. The interesting thing about GRM is it generally self-sorts things like SF, location, condition, raising/falling values, etc. and doesn't really fluctuate all that much when the number of units change.

Over the last several months I have captured as much information as I can on multiple family sales in both communities going back about four years. I then subdivided this information by location using somewhat the same criteria as you would describing the neighborhood and then further divided it by what utilities are included or not included. In both communities I ended up with four general neighborhoods. The results are pretty consistent within each area and within one community the GRM differs by approximately 1.5 X's from the older more rundown section to the area with newer and nicer properties.

Much of the initial information was gathered as part of a multiple rental property assignment and all I have done is expanded it from there. It sure has made more recent assignments a breeze. Explain the general information and the specific information regarding the subject and then pretty much plug in the results of your study. It is very hard for anyone to disagree with three to four years of information covering 20 or more sales.

 

[Terrel L. Shields]

I would use 4plex, 3plex, and duplex comps as needed. Over 4 brings you out of the 1 - 4 residential classification. SF or income as element of comparison.