Functional Utility

[Carol Barber]

Hey guys, the good news is, it may not have gone yet. It isn't due until tomorrow, and the supervisor was out most of the day, we didn't have a chance to talk, and he didn't have a chance to give advise, which is why I started here. This is an awsome forum, and I really appreciated you sharing your experience.

 

[PropertyEconomics]

ZZGAMAZZ, I felt that it would not have been credible to have gone any lower on the value either. There were several comparables that sold under foreclosure for 45-50K that were in far worse shape than the subject. The subject was updated. That was also indicated on my report. My conclusions on this report were based on as many facts as I could gather, combined with my experience as an investor in this market, and my limited appraisal experience. To suggest that my "OPINION" (which is what we offer, correct?)was swayed in any way is not the case. I had no idea what they were looking for. In looking at it from your point of view, and the limited information I provided here, I can see where you are coming from though, and I appreciate the input.

Carol

If you dont give us all the facts its impossible for us to really understand what it is you have done. Your post was pretty clear as to what the market showed and then you go on to state that you ignored what it said. Numbers aside, while they appear to be high from your analysis, my issue is one that has limited appraisal experience ignoring what the market has indicated. I still would love to know what your supervisor said about your analysis and your concluions.
While you are correct it is an OPINION .. it must be a credible opinion in order to meet USPAP and it cannot be misleading. I am accusing you of neither ... but more trying to understand.

Let me go one step further .. and I have to assume that your analysis is correct on your matched pairs. Considering the subject is in superior condition ... and given the range of your adjustments it would be reasonable to conclude on the lower end of the range given the condition of your subject. It would be interesting to know what their conditions were at the time of sale, the matched pairs that is. To go outside the supplied market range would take some very thorough explaination and even then would not have strong market support.

I await to hear how this turned out after your supervisor looked at it.

 

[Carol Barber]

My analysis of the matched paired sales was based on the following:

I studied only 2 subjects, each resulting in only 1 comparable sale or should I say "matched pair". One of them sold 3/29/06, definitely a different market, and I checked for comps within 2006. The other sold in 1998, again looking for comps in 1998.
I wasn't overly comfortable with this, however, that was all I could come up with. Each of the comparable sales that I used in the grid were in the sold range of 70k to 75K and the adjusted values (without the utility adjustment) were around 60k. I'll let you know how the story ends. Again, with so little experience, I may have very well botched this one. However, I learned a lot in the process from everyone here. Thank's again.

 

[Carol Barber]

I just reviewed what John Hassler said about the discount rate being consistent today as it was in different market times. I felt the same way. Aside from the fact that I did not use the market data that I found to make the adjustment, would the market conditions in 1998 play a factor in the discount rate used?

 

[PropertyEconomics]

My analysis of the matched paired sales was based on the following:

I studied only 2 subjects, each resulting in only 1 comparable sale or should I say "matched pair". One of them sold 3/29/06, definitely a different market, and I checked for comps within 2006. The other sold in 1998, again looking for comps in 1998.
I wasn't overly comfortable with this, however, that was all I could come up with. Each of the comparable sales that I used in the grid were in the sold range of 70k to 75K and the adjusted values (without the utility adjustment) were around 60k. I'll let you know how the story ends. Again, with so little experience, I may have very well botched this one. However, I learned a lot in the process from everyone here. Thank's again.

Carol .. it sounds like you did your matched pairs analysis correctly from what you have said. Percentages, in my experience, maintain relatively well over time periods, even though the total dollar amounts do change.
Sounds like you have done a good job with that if you compared the 2006 sale with another 2006 sale and the 1998 sale with another 1998 sale.
And thanks for letting us know what happens.

 

[Carol Ames]

The only problem I have with the analysis is the part about a different market. Was the subject in a different marketing area or was this just a different market because of the dates? I have done appraisals in older areas here where the access to the bath in that neighborhood had no effect on value. Yes it would in a different neighborhood but not there. Sometimes it is just knowing the subject market.

 

[PropertyEconomics]

The only problem I have with the analysis is the part about a different market. Was the subject in a different marketing area or was this just a different market because of the dates? I have done appraisals in older areas here where the access to the bath in that neighborhood had no effect on value. Yes it would in a different neighborhood but not there. Sometimes it is just knowing the subject market.

Quite good advice. The MARKET is always the place to go to measure the effects of "features" on market value. Good post Carol.