Guidance Please

[Terry L. Hart]

I have accepted an assignment on a 745 sf dwelling on 1 acre in a rural setting. Within 25 miles over the past 730 days there have been 0 comparable sales of dwellings nearing this size. There are 5 with sf of 850-960 but located in what this appraiser deems as not comparable areas. I am seeking suggestions from my peers. Thoughts?

 

[Tim Hicks (Texas)]

Go back over a year if needed. But, if that is all you have, that is all you can use. Explain in your report, that is the best you can do with comparable sales. Bracketing cannot always happen. There always has to be a smallest house and a largest house.

 

[Sid Holderly]

Yes, comparable for a rural area. For comments list "0" sales within 20% of living area within XX miles, X# between 20 & 25% & X# within 30% of living area. Going back more in time in the current double digit increase market has additional time adjustment problems. Crossing county lines may also be needed. Values in this area radiate lower by the distance fro the employment center, therefor a house 15 miles north of the employment center will be similar to a house 15 miles south of the employment center. For AMC's this may take several paragraphs to explain the large adjustments for living area and distance fro the subject. Also single line percentage adjstuments over 10%, net adjsutments over 15% and gross adjsutments over 25% for those AMC submission reviewers that look only at numbers on the page. Make sure they do not require you to use a riverfront fishing cottage to bracket the living area.

 

[Zoe]

If they are not comparable, there must be a difference location. You'll have to get a good handle on the differences in land value as if vacant between the subject and the 5 comparables you mentioned. Try to find sale somewhere that is very close to GLA of subject so you don't have to make a GLA adjustment for at least one sale. You can only go with what you got. Your GLA adjustments all may have to be negative adjustments on the comparables. You may not be able to bracket the subject on GLA. Just explain that in the report. I would even jump to 1,000 sq ft GLA or higher if I had to in order to complete the sales comparison approach.

 

[Zoe]

You might want to call lender and explain, but I think GSE will buy it if you explain it well. It may be in-house loan. I'll give you a hint. VA is pretty strict in their underwriting and I have had that situation before and they said don't worry about it. Just finish it. I could not bracket subject on GLA. When you are looking at a house that small, is it comparable to a 1200 sq ft house down the street? Very likely it is comparable. It may be surrounded by 2500 sq ft houses. If it is, the H&B use of site as if vacant would be to build a 2500 sq ft house. It would be considered an underimprovement to the site. Principle of progression would kick in.

 

[sputnam]

You do the same thing we always do when there is a lack of good comparables. You expand your search in both distance and time... and then... you use the data available to you to develop an opinion of value... and then... you write a report.

It's not written... anywhere... that appraisals are always easy or that appraisal reports are always pretty.

 

[Zoe]

You do the same thing we always do when there is a lack of good comparables. You expand your search in both distance and time... and then... you use the data available to you to develop an opinion of value... and then... you write a report.

It's not written... anywhere... that appraisals are always easy or that appraisal reports are always pretty.

Exactly. All those guidelines on percentages and things have to be broken sometimes. Especially in rural areas.

 

[Zoe]

I would try to bracket your opinion of value by unadjusted sales prices of the comparables. You should be able to do that breaking any guideline you need to. If you can't do that, still roll on.

 

[Overimprovement]

Try to find at least one comparable similar in each of the following respects, even if the differences in the other respects are large. This way, at least you are grabbing comps from a wide array of characteristics:
Location, recent sale, GLA, quality/condition. Example:
COMP1 is similar location, but sold 3 years ago.
COMP2 is 2 months old, but is 30 miles away and 200sf larger.
COMP3 is same size, but old sale AND far away...and so on.

 

[Terrel L. Shields]

Tiny homes are tiny homes... I don't see a problem with the size. So are they vastly different quality? Age? condition?

If not, you have plenty of data.

Hint - Utility not size is probably the key to value anyway.