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Incomplete Structure

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Rick Neighbors

Senior Member
Joined
Jan 19, 2002
Professional Status
Certified Residential Appraiser
State
Texas
Ok, here is one that I am struggling with.

Homeowner needs appraisal to argue tax value with local taxing authority. They are valuing his property as though complete.

4,000 square foot home, incomplete and still under construction, on 35 acres of ranch land. Home is probably 75% complete, but they are living in it. 2 story steel structure with all steel exterior, which adds to the complexity, but nice lay out and what has already been finished is good quality.

Unfinished includes flooring, right now just bare concrete floors downstairs, and wood decking upstairs. Fireplace is incomplete, some drywall is incomplete, lights, other fixtures, trim, etc.

Water, electricity, heat and air conditioning, etc, all finished. Homeowner has been building it himself, he is a contractor, and has been working on it for 4 years.

In trying to find a way to adjust for the degree of completion, I am looking at making an adjustment for functional obsolesence. It's not really an effective age issue, quality issue, etc. Floor plan is good, so it's not a poor design issue either.

Using obsolescence to infer a loss in utility and in market value is about the only thing I can think of to hang my hat on.

I'm open to ideas, as so far today, I have had a water leak under my house, and the next door neighbor's cows made a hole in the fence and got into my freshly cut hay field. I need to get this thing finished by tomorrow.

Maybe I just need a Margarita to settle my nerves ! :)

Rick
 

ZZGAMAZZ

Elite Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Gees that makes me think: At what point in time during construction does the tax assessment for improvements begin? I just figured it was upon completion and issue of the Cert of Occupancy. Is this different in different jurisdictions?
 

Rick Neighbors

Senior Member
Joined
Jan 19, 2002
Professional Status
Certified Residential Appraiser
State
Texas
Co

Well, this is rural property, so I guess they start charging taxes when they think that you have had enough time to build your home.:)

Probably didn't help that he moved into it already. They may think that he may never finish it, and they may be right. But he has another $50,000 budgeted to complete the home.

Rick
 

dobie

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
New Jersey
Gees that makes me think: At what point in time during construction does the tax assessment for improvements begin? I just figured it was upon completion and issue of the Cert of Occupancy. Is this different in different jurisdictions?


I agree. Usually after the town's inspectors sign off, they send that info to the assessor's office who then tacks on the added assessment according to what improvements have been made. At least that's the case here.
 

Lobo Fan

Elite Member
Joined
Nov 28, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
I appraised a 10 year old house that was over 3,000 SF that was still being assessed as a vacant lot. Happens all the time around here. Not to me though.
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
As ZZGAMAZZ noted, does the property have a Cert of Occupancy? Is one required?
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Around here, if a contractor or owner gets a CO before its 100%, they get taxed on 100%, since they are enjoying the use of the property. A penalty on the lack of patience I guess, since technically, they don't have to invite the local code folks back after they actually finish.
 

c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
Around here, if a contractor or owner gets a CO before its 100%, they get taxed on 100%, since they are enjoying the use of the property. A penalty on the lack of patience I guess, since technically, they don't have to invite the local code folks back after they actually finish.

And a good tactic to get another/final release from the lender.
 

Darrel Clark

Sophomore Member
Joined
Feb 15, 2007
Professional Status
Certified Residential Appraiser
State
Utah
I would determine a market value as if complete and then deduct for the unfinished items. A rough guide is found in the Marshall & Sift Residential Cost Handbook under Useful Information –Percentage Breakdown of Base Cost. Also the contractors cost breakdown to finish would be useful.

Although the market may react somewhat differently from the actual cost to finish the improvements, at least you do have something to rely on. As you know, it is not easy to find comparable sales of partially finished residences.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
The subject is probably rural and needs no certficate of occupancy because there is none required.

Rick,

I would begin with valuing what is liveable and then valuing the rest based on a percentage of completion. Either way, they will lose because they will be expected to finish construction some time and the county will not accept knowing by premonition when it is done.

The steel frame and siding sound like a workshop/barn/living area combination. I hate those.
 
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