Appraising The Overimprovement

[Have Laser-Will Travel]

How many SFR and what is the min, max, median GLA of those SFRs?

7 sales; 2044-2515 sf, median 2162 sf.

 

[Have Laser-Will Travel]

How many SFR and what is the min, max, median GLA of those SFRs?

7 sales; 2044-2125 sf, median 2162 sf.

 

[Randolph Kinney]

7 sales; 2044-2525 sf, median 2162 sf.

You said your subject sold in 2004 for $325,000 and it was 3,000 sf. Should your max be 3000 sf for that 15 year time frame?

The best comparable sold recently for $675,000 and is a craftsman design with good architectural appeal but it's only 2,000 sq. ft

I would do this procedure to get an idea of value today. Pick a home similar to the $675,000 2000 sf home during the same 2004 time frame your subject sold for $325,000. Do a ratio of your subject sale price to the comp sale price in 2004 and apply that ratio (multiply) the $675,000 comp today.

 

[Randolph Kinney]

The other aspect of value is to determine a location adjustment for the superior neighborhood and use similar GLA, design, year built, as the $675,000 comp sold recently. I would find a larger size home in the superior neighborhood to bracket the subject.

 

[J Grant]

It sounds like the driver of value is more the amazing period detail rather than size, since there are numerous 2800-3200 sf regular houses to be found. Typical buyers for period detail are a niche market. Look for other detail/period house sales or listings in region and see what they sold for/market exposure etc.

These kinds of assignments one has to play with them a bit...look up land sales, look at period detail houses that sold, talk to agents, etc. Don't be rushed and ask for time extension if need it. After you poke around a bit, develop a working location adjustment ( you can always change it ), find some period homes that sold, put them on grid etc, a value starts to emerge.

This is awesome!


It sold for $325k. The median price at the time was $190k. The average GLA was 1,100 sf.

It sold significantly higher back in 2004. (though I'd want to see what ordinary 3000 sf houses were selling for rather than a median price). Still, it sold significantly higher. The proportion in today's market might not mirror what happened in 2004, but it's one more piece of information. As I said, when I have an assignment like this, I go digging and come up with nuggets ( the sale in 2004 is a nugget), eventually through enough nuggets gathered and analyzed, the value is revealed

. I personally would not be looking at rentals as these period homes are rare and renting them out rarer still.. But rental rates are another piece of information, as are land sales..

Re, other fine period detail homes, just for now get some similar home sales, even in better neighborhoods. Just get teh sales, then pick a few of the most comparable ,in size etc, make location adjustments. Put them on the grid and adjust, you can always take one ( or all of them) off but you have to start somewehre

 

[Have Laser-Will Travel]

You said your subject sold in 2004 for $325,000 and it was 3,000 sf. Should your max be 3000 sf for that 15 year time frame?



I would do this procedure to get an idea of value today. Pick a home similar to the $675,000 2000 sf home during the same 2004 time frame your subject sold for $325,000. Do a ratio of your subject sale price to the comp sale price in 2004 and apply that ratio (multiply) the $675,000 comp today.

The listing for the subject didn't have a year built so, MLS didn't pull it. Regarding the latter technique-. Thank you so much!

 

[Have Laser-Will Travel]

It sounds like the driver of value is more the amazing period detail rather than size, since there are numerous 2800-3200 sf regular houses to be found. Typical buyers for period detail are a niche market. Look for other detail/period house sales or listings in region and see what they sold for/market exposure etc.

These kinds of assignments one has to play with them a bit...look up land sales, look at period detail houses that sold, talk to agents, etc. Don't be rushed and ask for time extension if need it. After you poke around a bit, develop a working location adjustment ( you can always change it ), find some period homes that sold, put them on grid etc, a value starts to emerge.

It sold significantly higher back in 2004. (though I'd want to see what ordinary 3000 sf houses were selling for rather than a median price). Still, it sold significantly higher. The proportion in today's market might not mirror what happened in 2004, but it's one more piece of information. As I said, when I have an assignment like this, I go digging and come up with nuggets ( the sale in 2004 is a nugget), eventually through enough nuggets gathered and analyzed, the value is revealed

. I personally would not be looking at rentals as these period homes are rare and renting them out rarer still.. But rental rates are another piece of information, as are land sales..

Re, other fine period detail homes, just for now get some similar home sales, even in better neighborhoods. Just get teh sales, then pick a few of the most comparable ,in size etc, make location adjustments. Put them on the grid and adjust, you can always take one ( or all of them) off but you have to start somewehre

Super! Thanks!

 

[Tim The Enchanter]

Try
Even Odder - Oddball appraisals class from McKissock online.
Did this one yesterday for CE.

 

[J Grant]

The recent sale of the craftsman house that sold for 675k...how much more did that sell for than ordinary houses of similar sf in the subdivision/neighborhood?
The subject sold for more back in 2004 than ordinary houses, and assuming the craftsman sold for more, it indicates buyers will pay more in this neighborhood for high quality/architectural/period detail .

At some point in lender appraisal they neet to know about subject in relation to predominate price. In which case you state subject over predominate price due to high level of restored detail., and the subject, though atypical for the neighborhood, is not an over improvement, because buyers will pay more for detail in that neighborhood. Data may show the subject would sell for less than it would in a superior neighborhood, but it's not an over improvement if relative to its neighborhood, buyers will pay more for its quality/period detail (shows marketability and demand)

 

[Randolph Kinney]

Fannie Mae Over-Improvements

An over-improvement is an improvement that is larger or costlier than what is typical for the neighborhood. For example, a 4,000 square foot home located in an area of homes where the typical home is 2,000 square feet may be considered an over-improvement. Furthermore, a home with an in ground pool in an area where pools are not typical may also be considered an over-improvement. The appraiser must comment on over-improvements and indicate their contributory value in the Sales Comparison Approach adjustment grid.

The fact that the property is an over-improvement does not necessarily make the property ineligible. However, lenders must review appraisals on properties with over-improvements that may not be acceptable to the typical purchaser to ensure that only the contributory value of the over-improvement is reflected in the appraisal analysis.