Functional Utility

[RSW]

Just call it a functional inadeaucy and don't confuse the reader.

 

[Carol Barber]

Thank You

All of you really got me thinking. I will let you know how it turns out!

 

[rvperry]

I am new to appraising with only a year of sporadic experience under my belt, as I am working as a limited appraiser on a very part time basis. I ran into a functional utility issue with a property where the only bathroom is accessed through one of the bedrooms. Does anyone have any suggestions as to how I would formulate an adjustment for this?

Carol, I have never talked on any forum before, actually never read this web site till a few days ago.
Yes, going to the only bathroom through a bedroom is not ideal.
The problem is --- you probably will not know if the comparables have the same situation.
I try to use comps of the same or almost the same actual age, same value range, most similar for size, although - this seldom happens.
Then, I will make a comment in the addendum refering to the bathroom situation as not ideal, but in a home of the subject's size, value range range, it is more accepted than if home were a newer home. Then I will say that I have used comps of similar age and size of which generally all old homes 75+ will have something wrong with them. Maybe that you get to the bathroom by walking through the kitchen.
Hope this helps
Ronnie V. Perry SRA

 

[Lee Lansford]

Tough situation!

In my 25 years of appraising, I have experienced the same situation only once...and that was 20+ years ago...and I cannot recall how I approached it.

One more suggestion: Interview several Realtors (experienced, respected) who regularly work the same area where the Subject is located. Explain the situation to them and ask them what do they believe the reaction of the typical buyer might be. When data are limited, interviewing market participants is but one more source of information for your further consideration as to an adjustment.

 

[Doug Trites]

Tough situation!


One more suggestion: Interview several Realtors (experienced, respected) who regularly work the same area where the Subject is located.

That is harder then finding the comps in this area.:new_all_coholic:

 

[Blueprint]

The market may already reflect the functional inadequacy and no adjustment necessary.

Correct. It is not automatically FO or a FI. It may or may not warrant an adjustment.

You can't begin to quantify an adjustment until you determine what is considered "typical" for the subject's primary marketing area. Sometimes that is easy, sometimes not.

For example, I do work in neighborhoods where walking through a bedroom to get to a bathroom, laundry room, living room, etc, is more typical than not. The typical buyers in these neighborhoods I describe pay for the # of bedrooms, # of bathrooms, and a kitchen, no matter how they are ordered and accessed. As a result, applying FO is not reflective of the typical buyer and would misrepresent the market value.

What I describe is extremely unique, with extremely unique typical buyers, yet it does emphasize that adjustments are driven by the typical buyer.

Plaese learn your market, before you begin to formulate an adjustment.

 

[Carol Barber]

Hi Kevin, I used your quote and term "privacy violation" Thank You! I found two other properties with the same issues, and found 1 matched paired sale for each. One resulted in a $15000 difference and the other in a $30k difference. I explained my process in my addendum, and gave it a "nominal adjustment" of 10k, which put me at a value that was supported by the sev and an offer that was already made on the home, (per homeowner). We'll see what the lender thinks...

 

[PropertyEconomics]

Hi Kevin, I used your quote and term "privacy violation" Thank You! I found two other properties with the same issues, and found 1 matched paired sale for each. One resulted in a $15000 difference and the other in a $30k difference. I explained my process in my addendum, and gave it a "nominal adjustment" of 10k, which put me at a value that was supported by the sev and an offer that was already made on the home, (per homeowner). We'll see what the lender thinks...

Your analysis showed $15,000 and $30,000 and you used $10,000 which supported an offer reportedly made? m2:

 

[ZZGAMAZZ]

Carol

m2:. . . point being is that the credibility of your report is impinged if the opinion of value was affected by the dollar amount of the offer made on the subject ... becuase you've become an "advocate" and jaudiced your objectivity...by appraising "to the contract" rather than 'to market value."

 

[PropertyEconomics]

Carol

m2:. . . point being is that the credibility of your report is impinged if the opinion of value was affected by the dollar amount of the offer made on the subject ... becuase you've become an "advocate" and jaudiced your objectivity...by appraising "to the contract" rather than 'to market value."

And Ignoring Market Data which showed a much larger adjustment was necessary. Oh wait .. that would have meant the value wouldnt have been there ... what was I thinking???? :Eyecrazy: