Location and View Adverse/Beneficial Question

[mmanolak]

So as some back story as to why I am asking this; I am currently a trainee appraiser in Hawaii, and the Certified Appraiser I am working under wasn't sure how to answer my question, and I have not seen a direct question that answered what i was curious about on this forum when I did a search. Maybe it is there or has been posted since, but i wasn't able to find it about 3 weeks ago when I was looking. Also I have not experienced something like this scenario in any of my classes I have taken from McKissock.

So as for my question, if the subject site has both an adverse and beneficial location and view; which one takes precedence in the report?
Like as an example, Subject Site D is both located on a Water Front and on a Busy Road, would the site be classified as Adverse or Beneficial under Location? In this case, if it matters, Subject D had impact of value due to it being located on a Water Front, while the Busy Road had no impact on it's value when looking at the market reactions.
And if it depends on what has an impact through market reactions, would it depend on which had the bigger impact, if it did have an impact?
Also would this be the same for View, such as having a Beneficial Water and a Adverse Industrial view?

 

[Michigan CG]

Some appraisers will state adverse for being on a "busy road" and do it a lot in my area for rural properties yet land sales say no one cares if the subject is on a 55-MPH rural highway.

I would guess the location on water in Hawaii would be a HUGE motivation for a buyer and with limited properties available on the water the busy road would have minimal affect. Do you have land sales to look at to get a conclusion?

 

[Addie]

i Rarely ever say beneficial or adverse. Waterfront in Hawaii though would be an exception.
Normal everyday busy road. I say neutral/residential. On the ”other” I state facts: busy road.

I then explain the UAD system uses absolute ratings and the market uses relative ratings. This location is neutral on relative terms as seen by market participants. Adjustments or lack of were made based on a relative scale and not an absolute scale as there is no proof an absolute scale exists in this market for any characteristics of the subject or sales used.

 

[Basically Rectangular]

which one takes precedence in the report?

That depends on the market reaction. If comparable properties with a water view sell for $50k more than non water view properties, and comparable properties with a busy road influence sell for $25 less than non busy road properties, I would say the subject has a beneficial water view with an adverse external influence from a nearby busy road. Just be sure that the road is indeed an adverse influence, as it may be neutral, but that depends on your data. There is no absolutely correct way for it to be written in the grid, it is all about the commentary. Note that however you choose to describe the subject and comps in the grid, you should also describe them the same way in future appraisals (collateral underwriter is watching).

 

[J Grant]

So as some back story as to why I am asking this; I am currently a trainee appraiser in Hawaii, and the Certified Appraiser I am working under wasn't sure how to answer my question, and I have not seen a direct question that answered what i was curious about on this forum when I did a search. Maybe it is there or has been posted since, but i wasn't able to find it about 3 weeks ago when I was looking. Also I have not experienced something like this scenario in any of my classes I have taken from McKissock.

So as for my question, if the subject site has both an adverse and beneficial location and view; which one takes precedence in the report?
Like as an example, Subject Site D is both located on a Water Front and on a Busy Road, would the site be classified as Adverse or Beneficial under Location? In this case, if it matters, Subject D had impact of value due to it being located on a Water Front, while the Busy Road had no impact on it's value when looking at the market reactions.
And if it depends on what has an impact through market reactions, would it depend on which had the bigger impact, if it did have an impact?
Also would this be the same for View, such as having a Beneficial Water and a Adverse Industrial view?

Sounds like you will make a good appraiser as you are asking the right questions ! ( a bit concerning your mentor can not figure it out ). All good answers in posts so far...

You were on the right track to answering your own question. The view rating is relative, unlike condition or quality which is absolute. You are lucky that it is apparent the water view dominates as a beneficial influence on price and marketability, with the busy road showing no adverse affect on price...just explain and comment, also any past sales along same stretch of road/ waterfront ( in my area we can "surf" overhead online maps to find sales since MLS often neglects to mention any adverse)

If such as your example of industrial and waterfront the affects of each was equal, aka no clear dominant adverse or beneficial since both affect, then it would be a more difficult problem but same would apply, comment, explain, seek support from other sales, area RE agent feedback etc.

 

[ucbruin]

"The view rating is relative..."

At least for now....

 

[KHS445]

My thinking is the water frontage/view would call for a larger positive adjustment than a busy road would call for a negative adjustment. So in your report you would probably need to explain that the water frontage/view contributes approximately $zzz to the value, but because the subject fronts on a busy road that contribution has been reduced by $XX.

You will need to research the market, even if you expand your search by date and/or distance, looking at sales/listings of improved and unimproved properties. If you chart this information some sort of trend will begin to emerge. This is not going to be a turn & burn type report if you truly want to get your adjustments correct using supportive data.

Thoroughly explain the your research, the supportive data reviewed, the ranges observed and your conclusions based on this information. Sometimes people will disagree with your final estimate of value, but if you walk them thru the process they have a hard time disagreeing with the information and methodology from which you drew your conclusions.

 

[andrew81]

provide the rating based on the factor with the greatest affect on value and in the comments discuss all factors.

 

[mmanolak]

Sorry for the delayed reply, and thanks for all the responses, and also just to answer a question asked really fast.

I would guess the location on water in Hawaii would be a HUGE motivation for a buyer and with limited properties available on the water the busy road would have minimal affect. Do you have land sales to look at to get a conclusion?

Unfortunately we do not have many land sales when coming to Oahu in particular, so not only would that idea be difficult but so is the cost approach in general here, in most cases we have to use a home that was sold in a tear-down condition to complete a report. The best we can do is look for a direct comparable from within the subject's market neighborhood, with the same building quality, condition, land size and age. In most cases we can find a very close comparable with a small deviation on all those aspects. However the average market participant here is willing to accept much wider deviation.

I see that many of you agree that the most influential factor should be the bases of the rating, like ucbruin stated, it's all relative, the thing to do in the report is impact of both since both are present. As for the reports we already discuss the impact that these factors have on value, as of the date of the appraisal. Thank you all for the insight.