Do Balconies count for anything

[Mary B]

Condo listed for 315,000. $40,000 in upgrades (which we did not expect to recoup.). 2 offers in two days (with only 2 people coming through) for full asking price. Bottom line sold for 315 not having to pay closing costs.

Appraisal done. I thought - knowing the comps that we might get $307 to $310.


It came in at $305,000

5 Comps. 288,000 no balcony) July, 252,000 (duress) July, 299,000 (no balcony) June, 298,000 (tiny 40 sq ft. balcony/front parking lot view) for sale and 245,000 Back shared balcony short sale for sale.

All but the short sale are 1252 to 1258 sq. foot and ours is 1288. The short sale is 1277.

2 have no balconies. 1 is a tiny 40 sq foot balcony. One is equal in size to ours but is on a corner where their back porch faces a line of back porches of other condos. Ours is 118 sq foot corner w. no view of utility poles or other homes and lots of grass and woods. One is equal size but shares a wall on the porch with another condo

There were solds in May but he didn't use these which I understand. In our same community just a few doors down (same street name and a stones throw away) are 'garage condos'. One sold 8/31/09 for $312,500 It's 1242 sq feet w/88 sq ft. patio - Not as big as ours but I felt this one should be subbed for the non-balcony condos.

I can handle honest feedback. Is it worth contesting this since he didn't consider the balcony vs lack of any balcony as well as the tiny front one that faces the parking lot?

Thanks in advance.

 

[Webbed Feet]

Hmmmmmmm

Let me ask you this. Are you thinking your balcony is worth $2,000 to $5,000 to the market place?

Are appraisals "Low," or are first time buyers all in a race to get a government backed $8,000 credit that therefore is driving them to overbid competitively against one another? So are the offering prices driven by a real estate market, or a government subsidy that is about to run out? What do you think happens when it runs out?

 

[LindaSL]

I wonder if there were enough sales even in the past 2 years to do a paired sales analysis on those with and without balconies. Personally, having a piece of the outdoors is important to me. I'd pay more for a balcony than not having one. That's me, though, and what's important to me.

 

[Mary B]

It is a small condo community with none closer than 3 miles. 6 sales from May until now. One was a for sale by owner. Most people in this condo community are original owners. The ones that sold took from 12 to 136 days to sell. All but the one that just sold but is listed as a for sale not a sold took 40+ days to sell. There were other available condos within a 9 mile radius. I don't think ours sold 'just' because people are wanting to make the deadline. Many other condos were cheaper and some very new ones were more but not by much. These people were willing to go to 326 which was about the same as the newer ones that were avail. Those are still, by the way on the market and mine sold in 2 days. Not just because of the balcony but it is rare to have the kind of privacy we have.

My beef (cause I heard from my agent and she said a tiny balcony or shared is the same as mine in FHA eyes) is that two of the comps had NO balcony at all. Turns out he did say to the agent that all are the same but no balcony makes a difference.

Now she is saying that if he didn't adjust for that...I have to get the buyer to order an appraisal - I have to pay for it - and then the bank has to decide if they even want to do it.

As to the question about value of a balcony? I know I would pay as much as 5,000 more for a good one. I would pick one with over one without any day.

 

[Mike Kennedy]

"no view of utility poles or other homes and lots of grass and woods."

Suggest the balcony size is not a key value driver; enhanced rear privacy with wooded view may very well be - should be demonstrated via Closed Sales (even older sales 6-12-18-24 months adjusted for market conditions (time) IF indicated by the market data), Active Listings, Pending Sales (under contract).

a. may have no impact
b. may have positive impact (usually does).

 

[hastalavista]

I would pick one with over one without any day.

I'd venture to forecast so would most other buyers.

All things being equal, the condo with the balcony would sell first. The next question is if it would sell for more and, if so, how much more (which is your question).
While it could be possible to find a discrete value for a balcony given a large enough sample group, it might be difficult if there is not enough sales to make the comparison and come up with an explicit market adjustment. But, there are two ways to consider an amenity as far as adjustments go:
A. Explicitly. Make a specific one-line adjustment. Support for this adjustment should be based on market evidence but can also be based on a competent appraiser's judgment (in the current environment, a competent appraiser's judgment might not be enough to satisfy a lender).
B. Implicitly. Don't make any line-item adjustment for the balcony, but give consideration in the final value reconciliation to the adjusted sale prices of the comps with balconies.

In a case like you describe, it would be reasonable for the appraisal report to give more weight to those comps with balconies in its final reconciliation; if those comps adjust at the higher end of the adjusted value range (and assuming all other influences of value have been appropriately evaluated), then it would be reasonable for the subject's appraised value to be positioned near/close/at the value of the condos-with-balconies.

It sounds to me like you have a reasonable question (others may disagree!).

 

[Mary B]

Thanks everyone.

Just talked to my agent. She called the appraiser. She said he was very nice and very helpful and indicated that she was welcome to call back if she had anymore questions but his answer was......

Other two smaller condos - had "sunrooms" (sunrooms are actually a part of the living room but with two 2 feet (on each side) wall seperations.. Not really seperations - but I don't know what else to call them. Windows are the same - the living room is actually smaller than mine but it has what they call a sunroom. Truthfully - they're wierd...as they only serve to break up the living room and no one who has them know what to do with them but put two chairs in it or a desk. They are also both on the third floor (three flights up) in the front - four flights in the back.

Bottom line - sunroom equals balcony. Crazy. Don't agree - nor would anyone looking at these condos but it is what it is I guess. Any thoughts?

 

[Mary B]

Oh - and both 'sunrooms' face the parking lot.

 

[Pamela Crowley (Florida)]

Let me ask you this. Are you thinking your balcony is worth $2,000 to $5,000 to the market place?

Are appraisals "Low," or are first time buyers all in a race to get a government backed $8,000 credit that therefore is driving them to overbid competitively against one another? So are the offering prices driven by a real estate market, or a government subsidy that is about to run out? What do you think happens when it runs out?

I'm just guessing, but think this very well might be what is going on.

It's time for the buyers to pony up their own money for the difference in the contract price and the market value from the appraisal. That really is how NORMAL real estate markets work for real market values to increase. If the potential purchasers don't have the money to pay the difference, why should the lender bank - with the taxpayers as back-up - pay the difference?

Maybe your real estate agent would be willing to lower his/her commission to help? If there is a mortgage broker involved, maybe s/he will lower their commission to help? Maybe all of you involved in this deal should split the difference among you?

Why does it appear that so many are so willing to have ALL taxpayers pay the difference? Our country is going under, and so many still want to play games.

 

[Webbed Feet]

But that's only markets where I work

<....snip.....>
Appraisal done. I thought - knowing the comps that we might get $307 to $310.


It came in at $305,000

5 Comps. 288,000 no balcony) July, 252,000 (duress)[only one with a matching balcony I take it?] July, 299,000 (no balcony) June, 298,000 (tiny 40 sq ft. balcony/front parking lot view) for sale and 245,000 Back shared balcony short sale for sale.

<....snip.....> Ours is 118 sq foot corner <.....snip....> One is equal size but shares a wall on the porch with another condo [the short sale I assume]

<......snip......> In our same community just a few doors down (same street name and a stones throw away) are 'garage condos'. One sold 8/31/09 for $312,500 It's 1242 sq feet w/88 sq ft. patio - Not as big as ours but I felt this one should be subbed for the non-balcony condos.

Based on your presented data, the appraiser had no recent sales in your project with closed sale prices that bracketed the final conclusion of $305K, let alone something higher. More, you have failed to inform us regarding potential seller paid closing costs involved in those comparable sales. Therefore, to an appraiser, those selling prices cannot be taken at face value to answer your questions.

Perhaps I am incorrect, but the only "Patio" units I have ever seen are ground floor ones and most often they have small yards as well. In markets I have worked in, I would expect a ground floor unit with patio and small yard to trump a balcony. In markets I work in a garage unit would more than beyond trump a non-garage unit, any day of the week, by a considerable amount if all else fairly equal. I think you are indicating here that your's has no garage. Based on a hypothetical subject similar to your condo, in my markets, I would have "subbed" the garage condo, not for non-balcony condos, but for large balcony/non-garage condos for purposes of showing what a superior garage/ground floor unit is selling for.