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Best Way To Approach This Assignment?

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liznindy

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
Besides running away........ ;)


I have an assignment which involves two seperate single family homes on one 3 acre+ parcel. There is also a detached garage workshop which has been converted to living area as well.

The legality of the subject is being addressed and after much research, it appears to be a legal, non-conforming use (attorney of owner is in the process of applying for a certificate of such).

Of course, I have no good comparables.

I am trying to figure out the best (and correct) way to appraise a property such as this. I found one MLS sale with two houses on one parcel (which is located approximately 30+miles away from the subject and is a much older home, etc., etc..).

The Cost Approach could be applicable, however, the homes were constructed in 1961 and this approach is thus not very reliable. Due to limited data, the Sales Approach is going to be hideous (will need to use duplexes). The Income Approach is applicable as the second home (and other structure) are leased.

I would like to combine two approaches (sales approach for main dwelling...Income approach for leased components of the subject) but I don't think this is possible?!



Any insight or recommendations from ya'll would be appreciated!

This is the same propery in which I was asked if I could 'ignore' the second (and third) structures and make a statement that they have no value.
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Are you sure running away is not an option?? :eyecrazy:

Seems like the first step is to have a really well defined scope of work for this one. Is this for a lender? If so, I'm sure you've made them aware that adjustments are probably going to be way beyond normally preferred parameters, not to mention what they're accustomed to seeing for time and distance search requirements for sales.

Sounds like you have the potential legal aspects covered.

As you said, the cost approach may not be relevant due to the age of the properties, but it may surprise you and end up supporting your value opinion.

Now for the tough part. Seems like the best way to tackle it is to go as far back in time and as far away in distance as necessary to find anything that compares. You already mentioned duplexes. In our area, there are homes with "mother-in-law" cottages that might be comparable. As far as "combining" approaches, actually the small income form seems to do just that. Sales comparison approach is used and is supported by both the cost and income approaches.

I don't know the best way to approach this animal and I've just been typing randomly hoping some bright idea would magically appear and solve all your problems! Needless to say, that didn't happen!

The alternative to running away might be to quote a fee for this complex assignment that's so high, they'll leave you alone! :mrgreen:

Good luck!
 

Richard J. Glesser

Junior Member
Joined
May 16, 2002
Professional Status
Certified General Appraiser
State
Michigan
Treat as owner-occupied duplex if similar comps are not available, use the 2-4 family form, and charge a substantial fee. :usa:
 

Soar Ohio

Sophomore Member
Joined
May 8, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
What is the highest and best use? Can the lot be split? If it can be split will the value be higher that way?
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
I do a lot of "2 on 1's" as they are called in our market, they are very common. Use the 1025 form as your guide. It covers all the bases. Use the cost approach (I wish I had houses as new as 1960's). For the income approach I have found (in my market) that if you compare bedroom count as opposed to GLA or unit count, you will have alot more data to work with. I know it feels weird (the first couple of times) to not rely on the sales approach but that is why we have these other approaches. Speaking of which there are more approaches other than the big 3. CVM (contingent valuation method) for instance, go out and survey the potential market as to their price range for just such a property, survey real estate brokers as to how they would price just such a property.
Good luck and charge a good fee!!!!! :D
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
oh yeah,
for rental data search all types of properties SFR, 2-4, Condos, co-ops, etc and compare on bedroom count, AND search Active, pending, sold, expired, canceled and withdrawn listings as the rental data is still valid even if the sale is closed or the property is no longer on the market.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
And I bet they want it on the 2055...... :p

Use the sales data you got, even though it's miles away. Look back more than 1 year for sales; these things don't sell every day. Also, remember to consider the extended marketing time required....... bet it'll be longer than 3-6 months. ;) Marketing time may even be years. :eek: That'll make the UW happy ..... oh well. B)

Do a good detailed income approach. And I'd do the cost too, even though it may end up that you don't apply much weight. But like Wally said, it just might help bridge the value range.

And remember, the best thing about these odd ball type properties is....... if you're wrong, who would know?? No other appraiser could do any better with bad or scarce data. :mrgreen:
 
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