Historic houses

[Alan Magill]

I have been asked to do an appraisal in Grapevine Texas on a house built 50 or 60 years before anything I can find. The house is a historical marker. I have been in the industry for 8 years, and have never run across anything like it. Help please.

 

[Otis Key]

Yes - USPAP ====>http://commerce.appraisalfoundation.org/html/USPAP2005/competency.htm

 

[Alan Magill]

Yes - USPAP ====>http://commerce.appraisalfoundation.org/html/USPAP2005/competency.htm

No kidding.

I am not asking what USPAP has to say about the assignment, but rather advice as to how to approach it. That is part of USPAP, trying to become competent. I have been researching the house as to when it was built and why it is a historic home. There are only 24 in the city of grapevine that are designated and none have sold in the last year.

I am asking for help in the way I approach the assignment. If anyone thinks they are competent to complete this job, please send me a PM. I would gladly pass it on to you. I am considered a resident expert by this client, and I have told them that I didn't think I was competent. They said that nobody has said they were. I am not thrilled about the assignment, but if I do it, I will be doing them a favor. It is going to take at least a week for this assignment. I am just asking for advice.

Some of the members of this board truly are insulting in their approach. No wonder we have a bad name. Why can't we just work together?

 

[Otis Key]

I meant no offense Alan. It's a fact and something that we must adhere to. Also, there is an out in USPAP and that particular section that can let you proceed but I'd check locally first before jumping onto the AF and looking for someone to pass this to. You'd be surprised at how many jobs I forward off to other appraisers, even ones I'm qualified to do. That's usually because of the fact that I know that an appraiser in that local market will charge a considerable amount less than me due to travel time.

Go back and reread that section of USPAP. Calls some other local appraisers and offer to work with them for free to get the experience. If all else fails, then that same section of USPAP offers the "out" option and then hit us up here.

 

[George W Dodd]

Alan,

Don't take it personally. As you are already aware, it's a complex property and as such requires an appraiser that has experience with these types of properties. Otis is only pointing out to you that if you have to ask "where do I start?" you might not be qualified to do the assignment on your own.
You didn't state the purpose of the appraisal so I don't know if it's for mortgage lending, estate, or something else. The purpose may allow different options on how to proceed.
If the purpose is for mortgage lending and you are using the new form then you need to review the certs because they don't allow for "learning as you go." If it's for another purpose than disclosure to your client (I'd recommend you get it in writing), and documentation of the steps you took to become compentent maybe enough. Another alternative is to look for someone to mentor you through the process.
Having done a number of historic properties I can tell you that a week is probably not long enough to complete the report. In my market there are signficant differences between historic homes that have been renovated and those that have been restored. It is not unusual to use sales that are older than 12 months and farther away than typical. Sometimes historic properties have a regional market instead of a local market, which opens a whole other can of worms.

 

[Alan Magill]

Alan,

Don't take it personally. As you are already aware, it's a complex property and as such requires an appraiser that has experience with these types of properties. Otis is only pointing out to you that if you have to ask "where do I start?" you might not be qualified to do the assignment on your own.
You didn't state the purpose of the appraisal so I don't know if it's for mortgage lending, estate, or something else. The purpose may allow different options on how to proceed.
If the purpose is for mortgage lending and you are using the new form then you need to review the certs because they don't allow for "learning as you go." If it's for another purpose than disclosure to your client (I'd recommend you get it in writing), and documentation of the steps you took to become compentent maybe enough. Another alternative is to look for someone to mentor you through the process.
Having done a number of historic properties I can tell you that a week is probably not long enough to complete the report. In my market there are signficant differences between historic homes that have been renovated and those that have been restored. It is not unusual to use sales that are older than 12 months and farther away than typical. Sometimes historic properties have a regional market instead of a local market, which opens a whole other can of worms.

I appreciate it, I didn't ask where to start. I have already started. I guess I need to be more specific. How should I try to document the adjustments. Paired sales analysis doesn't really isolate the historic factor due to the extreme differences in condition. I don't know how many of you are familiar with the Dallas market, but I am extremely familiar with it. I have dealt with several homes in historic districts. This is not in a historic district, rather it is a historic monument, the house has a history that is documented back to the cities charter. It is an extremely rare property. As I stated, the city only has 24. I I have thought about going further back and further away, but the adjustments would be off the charts in relation to the sales price and that would be for homes in historic districts not historical monuments.

It is a purchase. I have never met an appraiser that has completed an assignment like this. I have phoned several at my local chapter. Is Mr. Hicks around? I think he is from around here.

I guess I will just let them find someone that is competent. Hello. Skippy can you do this appraisal? Sure, no problem. What number you looking for?

I am in the process of getting out of the appraisal business. Guess who is going to be replacing me. You got it. Skippy.

 

[The Warrior Monk]

Having done a number of historic properties I can tell you that a week is probably not long enough to complete the report. In my market there are signficant differences between historic homes that have been renovated and those that have been restored. It is not unusual to use sales that are older than 12 months and farther away than typical. Sometimes historic properties have a regional market instead of a local market, which opens a whole other can of worms.

George hits on some good points.

Don't think arbitrary lender guidelines when appraising, such as only searching back 12 months, especially when doing specialty properties. Use the best sales available, regardless of guidelines. At a minimum I would recommend searching back 3 years for sales, and longer if you do not find anything. It's important to establish some point of reference if you need to use sales from other areas.

It is very important to know something about the interior features of the home, as well as the condition, and how they relate to value. Additionally, it is important to know what features affect value; e.g., exposed hand hewn beams, exposed post and beam framing, center fireplaces with a beehive oven in the kitchen, wide plank pine flooring. Each market is different. And were any features removed from the home during a renovation?

I can't emphasize this enough:

Driving by the home and making assumptions is not sufficient!

Interview the homeowner, talk to brokers, etc.

Good luck!

 

[The Warrior Monk]

This is not in a historic district, rather it is a historic monument, the house has a history that is documented back to the cities charter. It is an extremely rare property. As I stated, the city only has 24.

I posted a response before I got this clarification. I think the obvious approach is to see if another of the other historic homes that you mentioned here have sold, and see if there is a premium paid for them. We have had properties here where their placement on the National Register of Historic Places adversely affected their value. In these cases, it had to do with the poor condition of these homes and the manner that they had to be restored cost more than the value of the property.

I have thought about going further back and further away, but the adjustments would be off the charts in relation to the sales price and that would be for homes in historic districts not historical monuments.

Don't worry about the magnitude of the adjustments. It's more important to pick the best sales available. I think my record gross adjustment on a residential property is around 250%.

I have never met an appraiser that has completed an assignment like this. I have phoned several at my local chapter. Is Mr. Hicks around? I think he is from around here.

People that specialize in appraising landmark properties charge a small fortune for these jobs.

 

[DB]

I do these properties quite often .... did 2 this week that were built in 1884 ... I use reproduction costs (segregated and depreciated) rather than replacement cost, if applicable. As for comps ... you may have to go back several years and adjust based on evidence you find from the market.

I doubt TN market data will help you, but if you can think of anything that I can do to help, just holler!

 

[Kate]

Alan,

Here is what I would do.

The very first question to ask yourself is who is the typical buyer for this type of home. Second is where does this buyer come from (IE, local buyers or people from other areas). That is important b/c it can help you define your market area. If the typical buyer is from out of town, where else would they look to buy if this was the kind of home they want.

You said you had other historic properties. Look up the buyer agents from the last sale. Call them up and ask them a whole bunch of questions. What other homes did they show the buyer. Where else did they look. What was the motivation to buy this kind of dwelling. This can give you clues as to where to look for more sales.

Next. If you have a sale (don't care what year) of a similar historic property. Look at the market at that time. You will then be able to figure out a market reaction for this atypical feature.

Good luck.


Just a quick stupid question. Our licensing laws require that an appraiser be at least a Certified Residential if the are competing a complex residential assignment. Is that everywhere or just here??? Here they define "complex" as any residential property appraisal in which the property type, market conditions, or form of ownership is atypical and which characteristics(s) have a significant value contribution"