mikerorwick
Freshman Member
- Joined
- Dec 22, 2005
- Professional Status
- Certified Residential Appraiser
- State
- California
I have an interesting one:
Client is an individual(She is the trustee for her mother's estate)and wants fair market value appraisal of a duplex in Sierra Madre, CA so she can sell it to the church who owns the parcel next door to the subject. Transaction does not involve an agent and was not listed on MLS) Duplex is in fair condition and needs a lot of work, beyond my expertise in estimating cost of repairs. Not a tear down, in my opinion, but I'm guessing 20K-50K in repairs to bring into average condition. The appraisal is solely for the Trustee to determine what she feels a fair price to sell the property for.
The church is planning on demolishing the duplex and is only interested in the land, however, they realize there is some value in the structure. Seller just wants fair market value for the sale.
Here's how I plan on handling this: I've advised the client to obtain a contractor to estimate all repairs needed with a bid to make the repairs. Using the contractor's bid, I will use this to give an as is value, making a negative adjustment(using contractor's estimate of repairs) to all comparables. I will then provide an as is value and as repaired value. The buyer and seller agree that this methodology is the fairest way to proceed. I also thought of appraising the property as average condition, 'subject to' repairs', and let the buyer/seller figure out the cost to repair issues themselves. I'm just curious as to how any of you may have handled a similar situation.
Also, as the most important value to both parties is the 'as is' value and in the current condition, the property is not fit to be occupied, I'm leaning towards omitting the income approach. The buyer of the property is planning on razing and not renting to anyone. The client does not rent the property to anyone and does not plan to in the future. The income approach may be relevant in the market, however, as neither buyer nor seller is planning on using it as an income property, I'm leaning towards considering the income approach irrelevant.
Lastly, any recommendation on what form to use for this type of assignment?
Thanks in advance for any advice or any ideas. Any input is much appreciated!
Client is an individual(She is the trustee for her mother's estate)and wants fair market value appraisal of a duplex in Sierra Madre, CA so she can sell it to the church who owns the parcel next door to the subject. Transaction does not involve an agent and was not listed on MLS) Duplex is in fair condition and needs a lot of work, beyond my expertise in estimating cost of repairs. Not a tear down, in my opinion, but I'm guessing 20K-50K in repairs to bring into average condition. The appraisal is solely for the Trustee to determine what she feels a fair price to sell the property for.
The church is planning on demolishing the duplex and is only interested in the land, however, they realize there is some value in the structure. Seller just wants fair market value for the sale.
Here's how I plan on handling this: I've advised the client to obtain a contractor to estimate all repairs needed with a bid to make the repairs. Using the contractor's bid, I will use this to give an as is value, making a negative adjustment(using contractor's estimate of repairs) to all comparables. I will then provide an as is value and as repaired value. The buyer and seller agree that this methodology is the fairest way to proceed. I also thought of appraising the property as average condition, 'subject to' repairs', and let the buyer/seller figure out the cost to repair issues themselves. I'm just curious as to how any of you may have handled a similar situation.
Also, as the most important value to both parties is the 'as is' value and in the current condition, the property is not fit to be occupied, I'm leaning towards omitting the income approach. The buyer of the property is planning on razing and not renting to anyone. The client does not rent the property to anyone and does not plan to in the future. The income approach may be relevant in the market, however, as neither buyer nor seller is planning on using it as an income property, I'm leaning towards considering the income approach irrelevant.
Lastly, any recommendation on what form to use for this type of assignment?
Thanks in advance for any advice or any ideas. Any input is much appreciated!