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HELP - Is this a commercial or residential?

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Natalie Damiano

Thread Starter
Freshman Member
Joined
Nov 13, 2002
I am looking for information on how a property would be classified for
an appraisal needed to qualify for a mortgage.
The property has 3 buildings - building one and two are two family
homes, and building three is one cottage apartment. The property is
taxed as a two family (it use to be an estate property but the main home
burnt down and these buildings that are left have been converted to
apartments) Additionally, the town was very familiar w/ this property
and has it grandfater'd as a 5 family property. Would the appraiser
look at how the property is taxed or the grandfater clause when doing
the appraisal? How do I know if this falls under a commercial loan or
not?
 

John Hassler

Senior Member
Joined
Jul 23, 2002
Professional Status
Certified Residential Appraiser
State
California
Based on the information you provided it appears to be a legal non-conforming five unit property. Not enough info as to whether this is the highest and best use. You might doing a H&B use analysis for the client first. This appears to be a complex assignment - charge accordingly!

John Hassler
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
It is what it is plus it's grandfathered for what it currently is. I would call it a 5 unit and that makes it commercial.
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I just had one that sounds very similar. Legal, non-conforming, seven family property (two triplexes and one single family). Since it was more than four families, it went commercial. They tried to have it legally divided into three separate parcels (more favorable financing, I imagine), but the county said nope, can't do it. Talk to your client so they're clear on what they're dealing with. Ooops.......I assumed you're the appraiser! If not, and you just need to know how it might be classified for financing purposes, talk to your county tax assessor (looks like you have that information) and talk to several lenders to see how they might treat it.

Good luck.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
And just to make things more confusing....
You may want to ask the county what happens if the buildings burn down.
Can they be rebuilt in a similar manner or would they have to change over to a new zoning, say perhaps a single family home?
 

Charlotte Dixon

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Delaware
(two triplexes and one single family). Since it was more than four families, it went commercial.

Wally...Am I learning something here? Does a more than 4 family property make it commercial?
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Charlotte,

You're supposed to read my mind and know what I meant to say!

In this case, the zoning is mixed use with the subject being grandfathered as residential, legal, non-conforming. The only reason the county grandfathered the property is due to the single family residence. The triplex units are being marketed as commercial properties (took some investigation to find that out). After reviewing all the data, the lender figured that the best route to go would be to consider the property as commercial since residential reconstruction would not be allowed if something were to happen to the present structures.
 

Nancy in Friday Harbor

Junior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Washington
Hi All,

One thing that hasn't been mentioned in this discussion of a 5 unit residential property is licensure! I'm just a lowly 8O Certified Residential appraiser and am allowed by the Washington State scope of allowable work to perform appraisals of 1 to 4 unit residential property of any complexity/value.

Maybe you're all Certified General appraisers and I'm the only one who has to think about this problem...... But I could not perform any appraisal on this 5 unit residential property without violating my state's laws. :cry:
If you are not a Certified General appraiser, all the discussion about this property is moot.

In fact, not too long ago Washington State yanked the certification/license of an appraiser who performed appraisals outside of the scope of his licensure.

Being a wet blanket in Friday Harbor....
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Nancy,

I've seen pictures of the San Juan Islands and anyone living close to such a beautiful area could never be a wet blanket!

Good point on the certified appraiser issue. I'm state certified and consulted with a general appraiser on the property I talked about in my post and put them in touch with my client to discuss how to proceed. Competency is a big deal with me since I've only been at this for four years and there's lots of stuff I haven't encountered yet. Like the 2+ million dollar place I looked at yesterday on 9 acres with over 8400 SF of GLA. Yeehaa. I called a general appraiser to do the report but she's letting me tag along for the experience.

And we have yet to hear from the original poster to see if any of this discussion has been helpful...............
 

Nancy in Friday Harbor

Junior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Washington
Wally,
You're right, it is beautiful. Although, I have to say your 70 degree sunshine (see weather.com) looks pretty good right now after several days of sideways rain and gale warnings!!
In re-reading this thread, several appraisers mentioned that 5 units was considered commercial. This may have been another way of discussing the limits of licensure.......
I'm working right now on a residential estate with a huge, to-die-for kitchen attached to a large living/dining room with a nice (but small and not too special) bedroom and bath for the chef. The other bedrooms are scattered in a number of buildings around the 30+/- waterfront property.....on a non-ferry served island, no less. Can only get there by boat or by plane (of course, these folks have a separate apartment for the crew of the family jet........life's tough out here.).
Try your darndest to get more comfortable with doing the "biggies". If you don't, you're condemned to a life of doing cookie cutters-----and we all know where the "cookie cutter" business is headed (at least for now). I doubt that they'll ever be able to put an AVM on a large estate property...too many variables.

N.
 
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