Location-neighborhood Description

[norapp]

I know we are not allowed to use words like desirable or anything like that when describing a neighborhood. Any suggestions (please, no lectures) on what is allowed when describing the difference between my subject neighborhood (newer homes around 5 years old on lots over 1 acre) and my comps neighborhood (new construction tract homes sitting really close together). Can I use the description "tract homes"? My neighborhood really looks so much nicer than this new development and the appeal IMO is far superior although they are both selling for the same. Some people think new construction is worth any price.

 

[Meandering]

custom versus tract homes, small frontage lots versus wider lots. More new homes in closer proximity, versus some new homes surrounded by older neighborhoods.Sales activity in community X versus sales activity in community Y. Proximity to service businesses, schools and major employers. Access issues, HOA fees blah, blah, show all the differences and then show the market activity differences. No need to guess buyers like one community better than another.

 

[J Grant]

Why are your "comps" on small lots close together? New is not the only element for buyer choice and the buyer for a large lot over an acre is not the same buyer for a tract house on small lot even if both houses are recently built. Are there other sales in subject area on acre or half acre lots and or other acre or large site subdivisions you can use as comps? I would use one sale from the small lot subdivision only if I had to for a comp in C1 or C 2 condition..

The fact that they are selling for around the same price point is not enough to make such disparate properties comps". ...your problem is not how to describe the different neighborhoods the problem is the two neighborhood are in now way comparable and therefore the choices are highly questionable...unless you must use one due to nothing else sold newer in area. What age is the subject?

As for your question, describe the two subdivisions as they are; one is a tract style with houses on small lots close together and the other an area of acre plus lots houses set back from road etc

 

[bnmappraisal]

How old or new is your subject ?

From the OP

my subject neighborhood (newer homes around 5 years old on lots over 1 acre) and my comps neighborhood (new construction tract homes sitting really close together).

(my bold)

surrounded by older neighborhoods

(my bold) I'd change to "established"

 

[norapp]

Why are your "comps" on small lots close together? New is not the only element for buyer choice and the buyer for a large lot over an acre is almot never going to be the buyer for a tract house close together even if both houses are recently built. Aren't there other house sales in your subject area on acre or half acre lots and or further out but similar acre or large sites you can use as comps? I would use one from the tract subdivision if you must use it for C1 or C 2/newer condition..

The fact that they are selling for around the same price point is not enough to make such disparate properties comps". Sorry for the "lecture" but this makes me crazy ( having reviewed a lot of reports and having sold Real estate as an agent). Your problem is not how to describe the different neighborhoods which is not hard to do, the problem is that houses close together on small lots are not comps for houses in a neighborhood of acre plus lots.

As for your question, describe it for what it is, houses on small lots close together and an area of acre plus lots. How old or new is your subject ?

My subject is a large ranch (5 years old) and the only other similar size ranch style are new construction. I have colonials in my neighborhood that are much larger but lender wants at least one ranch. I live in a rural locale so there are not a lot of comps. The town I am searching in is 64 square miles. I get what you are saying. In a perfect world I would have at least one newer ranch home in a similar neighborhood but I don't. My question was how to describe the neighborhood. But thanks for the lecture.

 

[bnmappraisal]

As far as location (and I'm assuming you're doing this UAD) I'd use the 3 "beneficial" vs "neutral/adverse"

 

[bnmappraisal]

My neighborhood really looks so much nicer than this new development and the appeal IMO is far superior although they are both selling for the same.

Have you gone back in time? I understand you're talking about new(er) construction (subject being only 5 yrs old). But maybe go back 1-3 yrs and see if you can find any market reaction (beneficial, neutral, etc) for the larger vs smaller site sizes.

I think Marion has a couple good potential comments - the best I think may be "custom vs tract homes"

 

[J Grant]

My subject is a large ranch (5 years old) and the only other similar size ranch style are new construction. I have colonials in my neighborhood that are much larger but lender wants at least one ranch. I live in a rural locale so there are not a lot of comps. The town I am searching in is 64 square miles. I get what you are saying. In a perfect world I would have at least one newer ranch home in a similar neighborhood but I don't. My question was how to describe the neighborhood. But thanks for the lecture.

Okay that explains it better... idiot lenders cause this kind of thing though I can see why they want a ranch...( I would search for an older sale over a year back perhaps a ranch will show up?)

To describe the 2 different areas...the new subdivisin is comprised of small lots close together and the subject is comprised of acre plus lots offering superior appeal due to privacy and larger lot utility, with custom homes of different design ( if that is what they are). Then say the small lot subdivision sale is used due to lack of newer built similar size ranch style homes in area. Keep it simple.

 

[George Hatch]

The time to start summarizing your subject's attributes is in the neighborhood summary. This is where you summarize the neighborhood composition and proximate uses, overall pricing trends and the like. This is where the use of meaningless and generic boilerplate that appraisers commonly use comes back to bite them in the rear end. Just a couple more minutes spent being more specific in this section can save you a lot of time and effort and reader confusion later on in your valuation.

Consider for a second the difference between the following 3 opening lines in your neighborhood summary. (to which you will add subsequent commentary on proximity to schools and services and the like)

"The subject neighborhood consists of a ~200-unit residential subdivision that was built out between 2004-2006, and which features subdivision models ranging from 2461-3045 sf on relatively small subdivision parcels."

"The subject neighborhood consists of a ~200-unit residential subdivision that was built out between 2004-2006, and which features subdivision models ranging from 3045-4560 sf on relatively small subdivision parcels."

"The subject neighborhood consists of a residential subdivision that was initially built between 1920-1940 with small SFRs og 700-1000 sf, but has since seen various redevelopment waves that have added newer 2-4s and condo projects as well as a handful of larger homes of up to 3400 sf. "

Any of these neighborhoods could include a newer 3045sf home of average quality (like your subject) but those units could both be fairly expected to have differing value trends and differing values even if these neighborhoods were located adjacent to one another and were similar in proximity to services and the like.

From there you go to site and improvements descriptions and in each section can fairly compare your subject's attributes to the other proximate uses in its environment. By this time someone who is reading the report for content gets to your sales comparison they will be well prepared for your selection and use of comparables that share similar locational (or other dominant attributes) and why you might have to apply location adjustments for the otherwise-similar property located 2 blocks away but in the differing environment.

The mistake I've seen many, many appraisers make is waiting until the reconciliation of the sales comparison approach to explain why they had to use sales with different location attributes and what those differences are. If you start making your case (there aren't many properties with this combination of attributes) earlier in your report it won't come as a shock to the reader when they see those comps and those adjustments. They'll already be expecting it.

 

[J Grant]

A 5 year old ranch on one acre has more in common with a 20 or 30 year old upgraded /updated ranch on one acre than it has with a new construction ranch on a small lot tract style community. I understand why if desperate you have to use the new home sale but they are not really "comps"...lender obsession with bracketing contributes to this kind of thing.