Doozie of an assignment

[PropertyEconomics]

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.

Until Mr. Boyd does the analysis there is no way to tell if the accessory unit is worth more than $25,000 or not. I find it interesting how we often let bias enter into our thoughts, even though we dont know the market, havent seen the sales, and havent a clue as to what the analysis showed other than the final contributory value.

I would do this as you are Mr. Boyd, as a consultation. I would do a very thorough job and find all sales that I could that would support a conclusion. If the accessory unit is permitted I would think that permit would follow the property and not just the owners because that is one heck of an investment to only be recinded upon sale of the property.

I would think there are comparable sales, and the beautiful thing for you is that its not for lending purposes. You can go where you need to go to find a comparable, doing the proper analysis in order to arrive at a proper value indication whether it be $5,000 or $300,000 .... only the market can tell you for sure ... and I have faith you will do a very good job and your clients are in good hands.

The old addage holds true ... dont enter into business arrangements with family.

 

[Conservative in Virginia]

Can they subdivide??? If not I suggest they just all move in there and be happy together in their lovely new homes!

 

[Ross (CO)]

What seems equally odd is the 1/3 - 2/3 ownership arrangement that these parties have created. What happened to 50-50 or all-for-one and just let one couple live in the accessory unit with some monthly measure of financial contribution ?

Although you have stated this to be a consultation assignment.....what is the purpose or eventual intended use of your conclusions ? You just might need a course in family law practice and relationship counseling before your consultations are complete. What is a possible outcome whereby your services could be deemed as unsatisfactory and not supportive of the intended use (purpose) of your assignment ?....and you become the third party toward which these folks have a gripe ?

Sounds like an interesting one. Good luck.

 

[Crunch Hardtack]

Until Mr. Boyd does the analysis there is no way to tell if the accessory unit is worth more than $25,000 or not. I find it interesting how we often let bias enter into our thoughts, even though we dont know the market, havent seen the sales, and havent a clue as to what the analysis showed other than the final contributory value.

I think there is PE. I'm in Ohio not California, but I just mentioned a possible sub-market that should be more prevalent in CA than OH and that sub-market would certainly consider the second dwelling worth more than 25k. (not bias, just common sense......which seems to be lacking among many in this profession-a general comment directed at no one specifically)

New construction, legally permitted, cost to construct $300k. In ANY market you'd have a hard time convincing me that the improvement would have a contributory value of less than 10 cents on the dollar.

I agree that I do hope Mike takes the assignment as I would be interested to see how he worked it out.

 

[Mike Boyd]

I would think there are comparable sales, and the beautiful thing for you is that its not for lending purposes. You can go where you need to go to find a comparable, doing the proper analysis in order to arrive at a proper value indication whether it be $5,000 or $300,000 .... only the market can tell you for sure ... and I have faith you will do a very good job and your clients are in good hands.

The old addage holds true ... dont enter into business arrangements with family.

I agree with you AND Mike Shields. In fact, there are several new tracts going in and a couple other about 3 years old and sold out where they built 2 units to be sold together. The problem is they are ALL attached units. Even adjusting for age of the main house, they will support a value considerably higher than the $325,000. They are in an adjacent town which, from a historical viewpoint, is an equal market area as the subject. First I have to determine if there are any circumstances that would allow the 2nd unit to be rented as these new projects do not have that restriction that says one of the units must be owner occupied.

Thanks for the suggestions.

 

[Mike Boyd]

What seems equally odd is the 1/3 - 2/3 ownership arrangement that these parties have created. What happened to 50-50 or all-for-one and just let one couple live in the accessory unit with some monthly measure of financial contribution ?

I don't know yet although public records indicate that the Xs entered into ownership several years after the daughter and son-in-law.

Although you have stated this to be a consultation assignment.....what is the purpose or eventual intended use of your conclusions ? You just might need a course in family law practice and relationship counseling before your consultations are complete.

After 4 marriages and divorces I have HAD my courses in family law! LOL. The purpose is yet to be determined and will be part of today's interview.

What is a possible outcome whereby your services could be deemed as unsatisfactory and not supportive of the intended use (purpose) of your assignment ?....and you become the third party toward which these folks have a gripe ?

Also part of today's interview. I might just do the appraisal and suggest some legal form of mediation.

Sounds like an interesting one. Good luck.

Thanks for the tips.

 

[Mike Kennedy]

H&BU may be simply for an SFR with ZERO contributory value for the detached accessory unit (i.e. superadequacy). Would recommend consideration of equivalent additional amenities (i.e. ig pool, summer fam.occ. cottage, converted barn/studio etc. ......address the Utility of the second kitchen ......separately.

 

[Mike Boyd]

H&BU may be simply for an SFR with ZERO contributory value for the detached accessory unit (i.e. superadequacy). Would recommend consideration of equivalent additional amenities (i.e. ig pool, summer fam.occ. cottage, converted barn/studio etc. ......address the Utility of the second kitchen ......separately.

I would agree if this were a typical granny unit that has a legal max of 640 SF. But this one is approximately 1300 SF, roughly the same size as the main house. It is obviously over-improved....as a granny unit. I think city planning screwed up in allowing this as it creates a problem down the line. I will know more after I inspect it today and do some research with the city.

 

[Nate2]

When this all falls apart can the 2nd unit be rented?

 

[Mike Boyd]

When this all falls apart can the 2nd unit be rented?

That will be part of my research. I do know that the original house is currently rented. At issue is whether or not one of the units must be owner-occupied.

By the way, my appointment has been changed to 3:30 pm this next Monday.