Doozie of an assignment

[Mike Boyd]

Now here is an example of a complex assignment I just received over the telephone.

Mr and Mrs X took title to a home in an average neighborhood with their daughter and son-in-law. 1/3 ownership to M/M X, 2/3 to daughter and son-in-law.

The Xs commenced to build a granny unit by means of a special permit and detached from the main house. So far, they have put $300,000 into the granny, which is about the same size as the main house. They have had it appraised (subject to completion) by two different appraisers. Although there was very little data....no comps...of homes with grannies, the maximum value either appraiser could find for the granny was $25,000. I have not seen those appraisals but Mr. X says that the MAIN house is worth around $300,000 and, together with the granny a total value of $325,000 was attained.

Naturally, a dispute has developed between the son-in-law and Mr/Mrs X. Son-in-law maintains the Xs have only a 1/3 interest in the newly appraised value of $325,000.

This will not be a standard appraisal. At the least it is a consultation job wherein I will have to demonstrate the over-improvement and help resolve the conflict. To complicate the issue, daughter and son-in-law live 1500 miles away. And, other relatives have contributed money toward the building of the granny. I will have to meet with the others on the telephone or via the internet. I'm collecting a base fee of $400 plus $100 per hour for the consultation.

This property is in a SFR neighborhood and it cannot be valued as a duplex per zoning law.

Anyone have any ideas? I will be meeting them Thursday at noon. No lender is involved.

 

[CANative]

Anyone have any ideas?

Do an appraisal and let them and their lawyers fight over the issues.

I would NOT let an appraisal like this out the door with just 3 sales on non-granny unit properties. And $25k is not credible for a large, good quality accessory unit.

 

[Lee Lansford]

Somewhere, at some point in time, a property similar to your Subject sold. Such a scenario has likely been repeated multiple times.

An opinion of MV can be developed but I would suspect that the research might involve a considerable amount of time and effort.

And, as Greg offers, I, too, suspect that $25K for the legally permitted unit is probably a wee bit on the conservative (aka, "unrealistic") side of things.

 

[RSW]

I'd charge 25K for the appraisal fee.

 

[Ray Miller]

Run like the a big bear is about to bite you in the _____________ or charge a lot of beaver pelts.

I would just do the appraisal to the best of my limited knowledge and let the dung beetle handle all the mothers, dads, grandparents, aunts and uncles.

Got to run, have a township meeting tonight. Big auction tomorrow.

 

[Mike Boyd]

NOT an appraisal....more like a consultation.

 

[Ted Martin]

They obviously have more money than brains, and a proven bias towards legal action to resolve their problems. Whatever you charge will not be enough to offset the headaches associated with this assignment.

 

[Mike Boyd]

Do an appraisal and let them and their lawyers fight over the issues.

In affect, it would be father against daughter. Everyone crying. They don't want to go to court, that's why they called me. Actually, it was a referral from a local ReMax broker.

 

[Charles Knutson]

Are there any sales of SFR single unit properties with a GLA close to or slightly less than the combined GLA of the subject and the in-law unit? Ideally, sales with funky additions?

This is a way to look at the effective GLA of the property as an oversized SFR, which would allow a buyer with a large family to look at as oversized unconventional living space.

A comp with an addition that increases the GLA but doesn't significantly improve the market appeal could be helpful -- as part of a number of comps that establish a broad range of value.

On the high side would be any larger (and superior) duplex and/or SFR that establishes upper limits on the value potential -- along with a double shot of "cost does not equal value."

 

[Crunch Hardtack]

Interesting assignment. The son-in-law seems like a bit of a butthole. 25k is not a reasonable value for the addition, but what is? Your subject is a buy one get one kinda deal. If I buy the main house, how much am I going to be willing to pay for the second house?

Was talking to a guy the other day who had a second house built for his wife on the same property as the main house. The reason? Hubby was a bit of a slob and liked manly decor, whereas, the wife was neater and preferred more feminine decor. I've heard of a few more examples since I first heard of this and I think this may represent a new sub-market. To a prospective purchaser such as I've just mentioned, the second house would carry significant value.

Frankly, appraisers tend not to let the facts get in the way of an opinion. In the opinion of at least two appraisers the accessory unit was only worth 25k. They formed an opinion and were not willing to do the additional research necessary to arrive at a credible value. Again, do not know what the accessory unit is worth but it's more than 25k for sure.