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Competing Neighborhood?

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Tumbuktu

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May 23, 2013
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Certified Residential Appraiser
State
Texas
Subject's subdivision was developed in early 1980's and almost 99% of the properties were built between '1980 to 1985'. The very adjacent subdivision (separated by a small creek) was developed in 1955 and almost 99% of the properties were built between '1955 to 1960'.

Would the 'Adjacent Subdivision' which was developed 'Quarter a Century' before the subject's subdivision:
  • be still considered a competing subdivision, just on the basis of 'proximity to subject'
  • or it should not even be considered as these subdivisions belong to 'different eras'.
As always guidance and feedback would be appreciated.
 

Terrel L. Shields

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May 2, 2002
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Certified General Appraiser
State
Arkansas
I doubt the same buyer of property in one is seriously looking at the other since there is likely a price point difference. To me, a "competing neighborhood" would be something of similar quality, age, and very importantly price range. People pre-qualified for a $200 -250,000 loan are likely looking at homes in that range, not above, and unlikely below. And Realtors will steer them to the higher range of their pre-qualification even if they have a bargain "pocket" listing.
 

J Grant

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Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Subject's subdivision was developed in early 1980's and almost 99% of the properties were built between '1980 to 1985'. The very adjacent subdivision (separated by a small creek) was developed in 1955 and almost 99% of the properties were built between '1955 to 1960'.

Would the 'Adjacent Subdivision' which was developed 'Quarter a Century' before the subject's subdivision:
  • be still considered a competing subdivision, just on the basis of 'proximity to subject'
  • or it should not even be considered as these subdivisions belong to 'different eras'.
As always guidance and feedback would be appreciated.

Competing means properties compete for the same typically motivated buyer as would consider the subject. That is up to you as an appraiser to determine, consulting RE agents helps....and of course evaluation or properties, area knowledge, common sense) in determining what would be competing neighborhood...proximity is a factor but with not similar property types or different price points, proximity is no longer a factor. .

If an adjacent subdivision does not compete with subject subdivision but sales show up on a data search., I would comment on reasons the adjacent subdivision does not compete,, which is why no sales from it are used as comps.
 

residentialguy

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Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
Competing means properties compete for the same typically motivated buyer as would consider the subject.
If an adjacent subdivision does not compete with subject subdivision but sales show up on a data search., I would comment on reasons the adjacent subdivision does not compete,, which is why no sales from it are used as comps.
Yep...like using C2s when the subject is a C1. Totally different buyers and sellers in a different submarket... and using them could lead to misleading results if you don't adjust the C2s to the reaction of the C1 buyers and sellers. Like JG finally realized, you let the lender know about those sales and comment why they don't compete and why you didn't use them, but show how they may be the future of the subject. Glad to see you coming to your senses, JG ;)
I'm sure once you realize that you shot yourself in the foot where you said you don't give notes to the lender, you're going to go off into your psycho tangent again
 

J Grant

Elite Member
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Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Yep...like using C2s when the subject is a C1. Totally different buyers and sellers in a different submarket... and using them could lead to misleading results if you don't adjust the C2s to the reaction of the C1 buyers and sellers. Like JG finally realized, you let the lender know about those sales and comment why they don't compete and why you didn't use them, but show how they may be the future of the subject. Glad to see you coming to your senses, JG ;)
I'm sure once you realize that you shot yourself in the foot where you said you don't give notes to the lender, you're going to go off into your psycho tangent again
Evaluation of a competing neighborhood is not the same appraisal problem of using a resale to show market reaction in a new home construction appraisal. You failed in prior thread to understand why it was done after numerous posts so no need to rehash it.

You want to compare prior threads to new ones when the two have nothing to do with each other. e once you realize that you shot yourself in the foot where you said you don't give notes to the lender, you're going to go off into your psycho tangent again
 

residentialguy

Elite Member
Joined
Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
You want to compare prior threads to new ones when the two have nothing to do with each other
If an adjacent subdivision does not compete with subject subdivision but sales show up on a data search., I would comment on reasons the adjacent subdivision does not compete,, which is why no sales from it are used as comps.
Sounds spot on to me.
 
D

Deleted member 130081

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Subject's subdivision was developed in early 1980's and almost 99% of the properties were built between '1980 to 1985'. The very adjacent subdivision (separated by a small creek) was developed in 1955 and almost 99% of the properties were built between '1955 to 1960'.

Would the 'Adjacent Subdivision' which was developed 'Quarter a Century' before the subject's subdivision:
  • be still considered a competing subdivision, just on the basis of 'proximity to subject'
  • or it should not even be considered as these subdivisions belong to 'different eras'.
As always guidance and feedback would be appreciated.

Well that is what you have been hired to figure out!!! Only you can tell us that. In markets around here, where people are often rehab crazy, a 1950 may very well be competitive to a 1985. The 1985 is in fact over 30 years old and will likely have needed serious updating, just like the 1950 likely will - both neighborhoods are significantly aged. I have found that building trends around here from 1950 to about 1985 were very similar, meaning housing design did not change all that much, if at all. The 1990s brought in a new era, where every year and continuing to this day, builders created the next bigger and better thing. I often find homes from 1950 are more similar to a 1985 than a 1985 is similar to a 1995. Prices tend to also reflect this, where the newer designs command more than the old. When it comes to the homes between 1950 to 1985, it is usually size, quality and physical condition that most significantly affect price, not actual age.

Is location a driving factor in your market? Is there something about the subject location that is shared with the neighborhood across the creek? If yes, they may very well be competitive (same school maybe?). If what you find in your market is that the actual age of a home is one of the most significant elements, then maybe they are not as competitive.
 

Dublin ohio

Senior Member
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Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
As with so many other threads on this forum. The definitive answer is???? IT DEPENDS ON X,Y OR Z!!!!!!
:shrug:
 

Tumbuktu

Sophomore Member
Joined
May 23, 2013
Professional Status
Certified Residential Appraiser
State
Texas
Subject's subdivision is quite small and 'Adjacent Subdivision' is very big but I am just considering the part of 'Adjacent Subdivision' that is within half mile radius of the subject.
Schools are same in both subdivisions, GLA Range is at par, Quality seems at par (normal tract houses). Even the prices are at par. Interestingly prices of updated properties in the 'Adjacent Subdivision' are higher.
One of the properties in 'Adjacent Subdivision' has following sales pitch " ...Desirable and popular neighborhood of Mid-century Modern homes ..." . Of course no property in subject's subdivision would qualify as "Mid-Century Home".
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
did you call RE agents who sell in both subdivisions for their opinion? They usually have good insight into this aspect of the market.
 
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