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Condo Vs SFR

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Nancy Heiss

Junior Member
Joined
May 9, 2006
Professional Status
Certified Residential Appraiser
State
California
The subject is a newer DETACHED condo with a small lot. The purchase price is $757,000. A model match sold way back in October for $745,000 so I see how the realtor priced it. There is one active listing model match at $730,888. The rest of the detached condos are 200 sf smaller with one less bedroom and have sold for $680k - $725k. They may adjust out to the sales, price, but I haven't done the inspection and haven't begun to work on the report. By the way, the agent listed it on MLS with an APN indicating it's an SFR. (for those of you who don't know Orange County, condos always start with a '9', whereas SFR's are some other number.)

There are SFR's that are 200 sf larger, sold for $803k and $828k and listing at $828. If you look at substitution, a potential buyer may very well purchase the SFR or the Condo. HOA dues for the SFR's are about $50 less per month than the Condo dues.

I am not trying to hit the purchase price, I'm looking for what my peers would do. Would you use the SFR's to bracket the final estimate of value IF the adjusted value is over $745k (the model match sales price). Or would you explain that there are no sales of Condos as high as the subject value (again IF it adjusts higher than $745). I know the lenders want to see bracketing. It's for Wells Fargo, and I have never done any work for them before. Thank you for your input and insights.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Use all the condo sales from subdivision, adjust the smaller ones up for bedroom/count size. The model match sale...though back in Oct for 745k is best comp...what are upgrade or view differences between it and your subject....(if any?

Has market appreciated since then, or is market stable? ( here I see continuing appreciation in some areas, flat/stable in others ). If there are time adjustments, apply them to the sales, adjust for upgrades etc, see what comes out. After that".

A similar area SFR witiout condo ownership may be an alternate choice to a buyer but I would only use it as a fourth sale. I would see what the value is before using the SFR sale, and the SFR sale might need a downward adjustment for superior form of ownership...the SFR listing is priced at 828k and all the sales prices are considerably higher even allowing for 200 sf bigger, which would indicate an ownership /adjustment if you do use one

Why is the model match condo listing in your subject subdivision so much lower at 730k ?

Are there other subdivisions even if a bit further similar area SF style condo sales to use as comps?
 

nstanbru

Senior Member
Joined
Feb 19, 2009
Professional Status
Certified General Appraiser
State
California
By the way, the agent listed it on MLS with an APN indicating it's an SFR. (for those of you who don't know Orange County, condos always start with a '9', whereas SFR's are some other number.)

Verify the APN; if the one in the MLS is correct, sounds like you have a PUD, not a condo. Best thing to do is check the legal description.
 

AMF13

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
I have compared detached PUD units to detached condo units in the past, when I had not much choice, nothing else to use.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
agents get things wrong all the time...the title/legal/if condo docs exist are what counts...
 

Mark K

Elite Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
You mentioned substitution. Do your typical buyers care about or really know the difference between a freestanding condo and a freestanding non-condo? (IMO, they're both SFR) I 'd look there for guidance re: comps.

We have a lot of non-condos with maintenance agreements/fees that the owners will swear are condos; even the lenders don't know the difference. Point is, if it walks like a duck...
 

Nancy Heiss

Junior Member
Joined
May 9, 2006
Professional Status
Certified Residential Appraiser
State
California
Argh. I thought the answer became clear when I did the inspection yesterday. The lot is very large compared to the majority of units in the development. It looks like when they were new (2010), there was about a 5% premium on lot. HOWEVER. Looking at the sales for the past 2 - 3 years, the lot sizes are not making a huge difference. I do not think most buyers would know the difference between SFR vs condo, so I may need to use SFR's for a recent sale with similar lot. It's a good thing I like delving into the details.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I think most buyers know the difference, and the MV definition references a well informed buyer. The buyer may be open to purchasing either one, but they would know the difference. What is the marketing time for either type of property? If both SFR and the condo sell in roughly same days on market, they each have appeal equivalent. If condos take longer, they might appeal to fewer buyers...keep going sounds like it is coming together!
 
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