Comp burned down

[casurf2020]

Can you use a comparable in your report, if it burned down AFTER the sale date?

 

[Mary Tiernan]

Yes, you are stataing the condition of the comparable on the day it sold and comparing it to the subject as of the effective date of the report.

Very often folks buy a house then add a room or paint or improve landscaping, but that does not contribute to the value of the house as of the day it sold, right?

Might want to put a comment in the reoprt something like although comp X sold on XX XX date in average condition as reported, a recent fire destroyed the house and it is no longer standing. Photo is borrowed from MLS files, or a previous report, etc.

 

[Brockway]

I agree with Mary but the client might not. I once used a sale of a lakefront property that was demolished after the sale. I included a current photo of the new construction and an office photo of the original structure and explained. The client did not like the comp and made me replace it. This was unfortunate because it was my best comp.

I would check with your client first to save yourself more work down the road.

 

[Rufus]

<snip> ... Photo is borrowed from MLS files, or a previous report, etc.

Include your 'after' photo in addition to the MLS photo showing you did observe the comp from the street.

I almost made a mistake once when I was on 42nd Place and not 42nd Street so double check that if you haven't already.

 

[The Warrior Monk]

I agree with Mary but the client might not. I once used a sale of a lakefront property that was demolished after the sale. I included a current photo of the new construction and an office photo of the original structure and explained. The client did not like the comp and made me replace it. This was unfortunate because it was my best comp.

There is a difference between a house burning down by accident and one that is intentionally demolished. The intentionally demolished home is often an indicator of Highest and Best Use issues; i.e., the home was an underimprovement, and the property was purchased for the land. That could also be true of a burned-down home also, since some people donate these homes to the fire department. They have to be looked at on a case-by-case basis.

FWIW, clients cannot require appraisers to use or not use sales. The appraiser's opinion is the appraiser's opinion. If an issue arises where the appraiser was wrong, that is a different story, but otherwise the analysis should not be changed.

 

[Joyce Potts]

Can you use a comparable in your report, if it burned down AFTER the sale date?

Absolutely. What if the buyer died the day after closing. How does do either one of those scenarios compromise anything?

Furthermore, what difference does it make if the improvements were burned down or purposely demoslished? Do you think the seller accepted less of selling price because the buyer considered the current improvements obsolete or an under-improvement of the site? Of course not.

 

[JRS at OBX]

The client did not like the comp and made me replace it. This was unfortunate because it was my best comp.

The client didn't like the comp and MADE you replace it? So you realize that report was no longer your report and your value was not arrived at independently, right? Did you change your certification to say that the value was arrived at with full client direction as to which sales should or should not be used?


I would have no problem using a sale that burned after the date of sale but I would check to make sure it wasn't a fire department donation like stated above.

 

[Mark to market]

How would this comply with the the scope of work which says, the appraiser "must inspect each of the comparables from the street"?

 

[The Warrior Monk]

Furthermore, what difference does it make if the improvements were burned down or purposely demoslished? Do you think the seller accepted less of selling price because the buyer considered the current improvements obsolete or an under-improvement of the site? Of course not.

The market dictates the price, not the seller. If the dwelling does not contribute to value, say the 1,000 sq.ft. ranch in a neighborhood of 7,500+ sq.ft. homes, buyers are not going to pay extra because there is a house on it. In fact, in NY, the house often bulldozed just prior to the transfer to avoid the mansion tax (paid on improved, but not on vacant, properties selling for > $1,000,000).

 

[Ray Miller]

I once had a subject that I posted pictures of here on AF a few years back that had burnt down just a few hours before I got there. what a way not to get and appraisal fee.