Homeless Shelter

[Tammy Tidwell]

I recently got asked to appraise a 4,000sf home with 15 bedrooms and 6 baths. I spoke with the homeowner and it turns out to be a homeless shelter. The town in which it is located, is small and lacks anything that is similar. Is this considered commercial? It is not an income producing property, however if it was on the open market only commercial investors would consider it. Should I proceed?

 

[Mztk1]

Call your client and tell them what it is used for and how its set up is atypical for the market. They will most likely cancel.

 

[PropertyEconomics]

Homes such as these are typically government funded as their only source of income and I would think the job a bit too complex for a licensed appraiser. I think Mr. Klos has given good advice.

 

[Kevin A. Spellman]

This is most likely a special use property and probably exempt from zoning. There is value in use, but you can only do the appraisal as residential most likely for lending purposes.

 

[Walter Kirk]

Over 20 years ago the office building next to my real estate office was turned into a homeless shelter. This use ruined my real estate business since my clients and tenants were afraid to come to my office.

I asked the city to take some action since this use of an office building violated the zoning ordinance. The city took no action since the homeless shelter served a need in the city. It turns out that the city and county governments were funding the shelter.

This is not a typical residential or commercial appraisal and a very detailed appraisal will be required.

 

[Louis Pompeo]

I think you should refer the assignment to Walter Kirk and let him get even...

 

[George Hatch]

Alternative uses would include other group homes, such as board-n-care, rehab facility, women's shelter, religious retreat, assisted living, hospice, etc.. Even an extended family might consider buying such a property.

Definitely an "atypical" property and therefore a complex appraisal assignment. Most Certified Res appraisers would probably pass it on.

 

[PropertyEconomics]

This is most likely a special use property and probably exempt from zoning. There is value in use, but you can only do the appraisal as residential most likely for lending purposes.

I am sure what you meant to say is that the lender can only lend if the appraisal is done as a residence. An appraiser should not care what the lender wants and the appraisal must reflect whats there, and if that be value in use or a commercial value then so be it.

 

[Kevin A. Spellman]

It is my opinion a homeless shelter operating within a residential property can only be operated by an exempt status. The property in all likelihood would fail to receive favorable action for lodging by the municipality for a private individual. So I believe if a lender is involved, a residential value would be determined. A lender taking title could not re-sell a special residential use property to a private individual for lodging use; an exemption must take place for the special use to continue. If there is a lender involved the risk of taking the property back should be considered and not the value in use.

We just had a nursing home in my town converted for the use of drug abuse rehabilitation operation. The nursing home was vacant for well over ten years and no-one could get permits to re-use the property. An exempt corporation bought the property and was excused from zoning and permitting. The pricing for this vacant nursing home was $1,500,000 - $1,900,000 for years and then sold for $950,000 to an exempt corporation.