GLA adjustments of condos compared to single family properties

[chad hampton]

It would make sense to me that the GLA rate applied to condos would be higher than single-family because there aren’t as many factors built into buying a condo, with land being the major one. That’s what my reasoning ability, knowledge, and experience in the market tells me.

 

[J Grant]

It would make sense to me that the GLA rate applied to condos would be higher than single-family because there aren’t as many factors built into buying a condo, with land being the major one. That’s what my reasoning ability, knowledge, and experience in the market tells me.

That is true, however, when doing SFR I subtract the land out for the GLA dwelling sf adjustment - unlike RE agents who divide the sf of a house into the total price for a crazy high $ per sf figure!

I love it when I meet a RE agent at a property and they say , " These houses are going for $300 a sf." Meanwhile, my $ per sf extracted after taking the land out and treating it as contributory value might be $100 a sf.

Which still leaves the $ per sf of the SFR lower - but not always. A luxury penthouse condo is going to be high $ per sf. The last one I did had a $600 per sf adjustment. But its price tag was in the six mil range. Ocean views, 3200 sf, $8600 monthly HOA fees.

 

[ZZGAMAZZ]

With a SFR purchase, the lot (land ) is baked into the sale price. With a condo, the building amenities and services /maintenance is baked into the sale price.
When appraising SFR or condos, we compare similar to similar - a buyer looking for a luxury condo building with valet parking, doorman, fancy gym and pool with a monthly HOA of $980 is not be the same buyer for a plain condo with few or no amenities that has an HOA fee of $230. A buyer for a house on 3 acres is not the same as a buyer for a tract house on a 7000 sf lot.

That is why every appraisal is unique and why AI or data-driven AVM-type programs can get it wrong.

An interesting assignment is the sale of a "site condominium" in a development with few sales. I always struggle with the potential impact of the subject's HOA fees if it is necessary to include SFR's as comps, i.e., Do the services/amenities in a [non-gated] condo development balance themselves????

 

[Fernando]

Just get comps similar to subject's gross area whether SFR or Condo and adjustments for GLA should be minimal.
For all appraisals, less adjustments needed to do are better in getting to accurate appraised value.

 

[ZZGAMAZZ]

Lower line item adjustments result in lower gross adjustments that indicate appropriate comp selection, granted. But to govern the $/unit adjustment factor seems like a snarky way to support the OV. [But.I have no idea of how industry theory views the issue????]

Just get comps similar to subject's gross area whether SFR or Condo and adjustments for GLA should be minimal.
For all appraisals, less adjustments needed to do are better in getting to accurate appraised value.

 

[J Grant]

An interesting assignment is the sale of a "site condominium" in a development with few sales. I always struggle with the potential impact of the subject's HOA fees if it is necessary to include SFR's as comps, i.e., Do the services/amenities in a [non-gated] condo development balance themselves????

We have very few of these but when i did them in the past, I have used an SFR as a third or fourth comp - if an adjustment was initiated for non condo ownership of those comps, it showed up in prices and thus was easy to apply.

 

[Fernando]

$/unit is easy way to quickly see the condo market in different areas. Real estate agents and public easily understand that.
For appraisers, each unit needs to be analyzed regarding condition, location, and view given similar size to subject.
For me I want to see exact location of the condo/townhome comps and takes more physical effort in walking and going to see them.

 

[ZZGAMAZZ]

More n more when the application.of Matched Pair analysis becomes so logical, supple, & user-friendly, RCA's emphasis on MLR becomes more n more incontrovertible IMO.

We have very few of these but when i did them in the past, I have used an SFR as a third or fourth comp - if an adjustment was initiated for non condo ownership of those comps, it showed up in prices and thus was easy to apply.