Extracting 1 vs. 2 Bedroom adjustment in luxury condominium

[Echipman]

I'm working on a relatively hard appraisal, which under past market trends would probably have been a lot more straight forward. I am doing a mid-rise luxury condominium in downtown raleigh. Square footage is 1145sf, 2BR, 2Bath. There have been only three closed sales out of the 82 total units, one of which fortunately is the same model as the subject and located on the same floor location in a 10 story mid-rise; however, the condo only sold for $327,000. That is obviously my best comparable as there did not appear to be any distressed sale issues apparent. Needless to say the more luxury dwellings of higher value have been taking a hit over the past six months. But my question is this. The next sale is also on the same floor of the project and is 926 square feet and only sold for 247,000, but is only a 1 BR/1 Bath model, which displays that people are paying a considerable amount more for the extra bedroom and bath. I have already extracted the appropriate GLA Factor for the square footage adjustment, but there are no units of similar square footage with 1 BR and 2 Bath or 2 BR 1 Bath, etc...to calculate the necessary adjustments for the contribution of a bedroom and the contribution of a full bath. This project is very complex and deals with a wide range of needed adjustments i.e. floor location (the higher up the better view), bedroom count, large GLA factor, bathroom contribution. I wanted to pick your minds and see where you would go from there. The unit that was the same model had zero adjustments and if I had more sales available I could probably extract them easily. The LO is looking for this thing tomorrow and I am in the office at 11:15 ET still working on it. Please help! Any opinions would be greatly appreciated. We all know how mad and out for blod a borrower can get when the home they just purchased for a lot of money a year ago is considerably lower in value and I need to ensure that all my adjustments are verified and accurate before I sign my license to this.

 

[Deleted member 77547]

1) The post is difficult to read. If you can, go back and use the edit feature to break it up into a few paragraphs.

If I've read your post correctly.....

2) I'm wondering if the one bedroom unit is relevant in this case, other than the fact its on the same floor in the same bldg. A GLA adjustment and/or a functional utility adjustment may apply... but careful not to double dip. I suspect that the net/gross adjustments will be very large and thus, the comp irrelevant. Other than it selling in the same bldg on the same floor, its really not comparable.

3) You could go back in time when there was enough relevant data and figure out a percentage adjustment between the two bedroom and 1 bedroom unit an apply it here.

4) I'd try and find a 2 bedroom/2 bath unit outside the development and use that.

p.s. welcome to the Forum

 

[Echipman]

The GLA is pretty high, but typical in this area at approximately 115.

I went back three years and found a couple sales of similar size (one with one bedroom one bath and one with 2 br 1 bath) in the complex that i made sure sold around the same time to extract the Bedroom Adjustment of $20,000 per bedroom, as one sold for $287,000 with the 2/1 combo and the other sold a month earlier for $267,000 with 1/1 combo.

That just gets rid of one adjustment and I need to extract the bathroom adjustment...

I have two sales with similar closing dates that are located on the same floor as each other. One has 2 BR/1 BTH and is 954 sf. Sales price of $283,000.

The other sold within a month of that one with 2 BR/ 2 BTH on the same floor with 1144 sf. Sales price of $342,500.

After I adjust for the difference in square footage where do I go from there?

 

[VegasWayne]

You could do a multiple regression analysis using every unit in the building to determine adjustments, but you are still looking at a net adjustment of around 25%. You need to find some similar comparables in another building.

 

[Echipman]

Yeah I know...I've extracted floor location, GLA, Bedroom count, plus they are given spots in the parking garage based on bedroom count (2BR:2Spcs, etc...), which I have extracted as well. There just isn't anything relatively proximate that is very similar. I just feel that if I am going to exceed guidelines, it would be better served to exceed them in close proximity....

One more question guys and thank you for trying to help! In the sales comparison grid where the adjustments are made for bedroom count, bathroom count, etc...once I extract both the bedroom and bathroom adjustments, should I combine them because there is no separate area to separate unless I get creative and adjust elsewhere such as the design section by calling it Resid./Condo 2br or Resid./Condo 1 BR, etc...Combining them looks like it would surely exceed FNMA one-line adjustment guidelines, even if I comment and the adjustments are accurate.

 

[VegasWayne]

You also should check the listings and pendings, I did one in a luxury condo recently where the most recent model match sale was for 395,000. There were three model match listings from 198,000 to 239,000. If there are any larger units in the building, look at them too.

 

[Echipman]

There was one larger unit in the complex; however, it was a 1497 sf penthouse with 3BR on the top floor. It sold for $497,000 and would have required substantial adjustments for floor location on the top, it would have greatly exceeded one-line square footage guidelines, it required an adjustment for assigned parking and also for bedroom count. That one was def not comparable.

The one sale that is our same model on the same floor sold at $327,000; however, as I said before, they bought the condo last year for $362,000. I wish there was a way to be justified in deffering from utilizing it because the sold price pf $327,000 was approximately $20,000 below its tax assessment, but there was no mention of any distressed issues and per county records there was no mention of motivated seller or short sale and it was not a corporate or foreclosure per tax records either. I guess this guy is just out of luck because no underwriter, especially now, is going to let me get away from that one easily. I might just have to get up early tomorrow and call the listing agent and ask her why it sold so low and hopefully she'll have some good news.

I guess I'm just overthinking it a little bit because I've been there before when homeowner's get an appraisal well below what they paid for it. Even if the value is supported and accurate, they are mad, and with good reason. I would be too if I lost 30k in value in a year. But in the past they seem like they want to take it out on someone and most of the time it is us they take it out on. That's why I'm worried about it. I'm confident in the work I've done, but no one appraisal is worth a field review or anything that could effect your livelihood.

 

[Vegan702]

You have 3 locations you can adjust in the sales grid in the same box for bath, bed, GLA. If you exceed the guidelines, you exceed them, don't try and circumvent them by adjusting elsewhere to hide them, as then you are guilty of a lot worse then exceeding a Fannie guideline.

 

[Echipman]

Yeah I figured that from jump street. If you couldn't already tell by reading this, I'm pretty tight when it comes to appraisals. I don't care if it is coming in short as long as im justified, but its better to be tight and thorough than be careless and wreckless for one appraisal out of many. Some work some dont. Condos are just a whole different ball of wax especially in a prestigious downtown area where the slightest differences in unit factor in along the way. I appreciate your help and I hope the headaches are fewer are farther between.

 

[Mike Kennedy]

"Condos are just a whole different ball of wax"

I applaud your efforts to "do it right" and asking for assistance, but (directed at your S.A. not at you)....

......your Supervisory Appraiser says.............?? Is he/she not co-appraising this one with you?

HINT:
(* if your status is no longer a Trainee.....recommend sending a note with your license # to Wayne who will verify and upgrade your License status)