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I need advice

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MarkRichmond

Thread Starter
Freshman Member
Joined
Jan 16, 2002
I am doing an appraisal that really has me stumped. The subject is a townhouse in downtown Madison which was built 15 years ago. None of the other 5 units have sold in the past 2 years and there are almost no other projects that are similar (townhouse style, with 0 lot lines between units and ownership of the ground underneath). Most of these kind of developments are built and sold as condominiums and even then they tend to be built on the outskirts of the city.

What would you do for comps? I have one condo of similar size sold recently downtown. I have two, 80-90 year old single family houses with similar GLA that have sold recently that I could use as comparables. And, I have two, 2 year old comps of similar townhouses (one of which is the same development).

Any thoughts?
 

Judy Whitehead (Florida)

Senior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Well, first of all, I would definitely use the two two year old comps including the one in the same development. This might be a case where you have to use something "competitive" whether or not it is also a 0 lot line site. In other words, if you were considering buying one of the units, what would be its competition? Usually it is a combination of location, size and price. So, if you had something that was in similar condition, similar size and located fairly nearby, then it might be competitive (or comparable) to the subject. I would try and find at least 2-3 of these to use, as well, even though they may not be townhomes.

One of the hardest lessons I had to learn when I started appraising, was that if a sale of the same thing didn't occur, then it didn't. I kept staring at the computer until my eyes almost dropped out. What I usually do at that point is what I suggested above - what does it compete with in the market?
 

slacker

Junior Member
Joined
Feb 20, 2002
Well, first of all, I would definitely use the two two year old comps including the one in the same development.

Two year old comps?? I don't know one UW who wouldn't drop dead laughing if I turned in 2 year old comps. There's got to be more in Madison somewhere.

My advice, move to the Chicago area.

Actualy, I would go outside the immediate area for comps and add two or three other comps of more typical properties within the immediate subject neighborhood to show marketability of the neighborhood.

Two year old comps?? No way........That Florida sun must be getting to you Judy :D
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
A 2 year old comp can be used as long as there is data in the general competing market to make any time adjustment. A lot of support is needed. I hit the same thing in another smaller community in my area. 1 condominium project in the town, 10 units, 1 sold in last 2 years. Had to use other properties that would compete for this size property, and adjust, adjust, adjust. If the sales aren't there, they just aren't there.

Roger
 

Wally Jones

Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I agree with Judy. In this case, it appears the older comps are the best available and with the limited availablility of similar properties, are more likely to represent the subject's value. Yes, include sales of something similar no matter how far away from the subject. Yes, include dissimilar properties in the same neighborhood to show the marketability of the subject's area. But the fact remains, those two older sales appear to be the most representative of the subject in this case. If possible, look at other sales in the neighborhood over the last two years to see if you can determine how much the market may have increased/decreased in value over that period. Lots of explaining in the comments!

Don't forget to touch base with your client about your increased fee...... 8)
 

Judy Whitehead (Florida)

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Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Florida
The FNMAE guidelines are just that - guidelines. I have used older comps before. If you were in a more rural area like I am or are appraising an unusual property, then it might be accepted. I did suggest that additional comps be added that were more up to date. And yes, this has been a most stressful couple of weeks........
 

MarkRichmond

Thread Starter
Freshman Member
Joined
Jan 16, 2002
Thanks for the help. I gave a lot of thought to what competes with this property and the answer is downtown condominiums. I have never used a condo against a "house" even if the "house" only has 700 feet of land.

Do you think this is acceptable to use a condo against a Townhouse?

I can certainly expand my search away from the downtown area and will do that but my gut tells me that using 1 condominium sale is a more accurate reflection of the subject than heading out towards the edge of the city.
 
A

Anonymous

Guest
You are the appraiser, you decide if the comps are appropriate. You can not ignore the most recent sales in the project. Do not use condo sales period. If you decide to expand your search area you must determine whether sales in outlying areas are really comparable to your subject. Would the person who bought in the outlying area really consider your subject or it's neighborhood. If the underwriter doesn't like your comp selection ask him for his appraisal license number.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Just in my experience:

Most people that buy a townhome do so because of the small yard that usually means little or no yard work. I find that a condo would be more associated with similar motivations - or 0 lot line patio homes with very small yards.
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
Mark,

Use the condo sales. What you have in effect is a condo anyway. It's a footprint unit where the owner "owns" the land under the unit only, right??? Once you step out the door, it's common area.. just like a typical condo. Just explain it in the report. Usually all maintenance is done by the association? These are common in PA and PA is the only place I've ever encountered them in my appraisal career. Footprints are neat units that get around the "bad publicity" of condo...when they really smell like a condo anyway....so use condo sales, if you don't have any footprints to analyze

Ben
 
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