Me thinks there is something wrong with it also.

[Ray Miller]

Bank just sent an appraisal over for review. They seem to think there is a problem with it. Me thinks there is a problem as well.

It is a four unit, the appraiser used duplexes for comparable sales and comparable rent.

I run the MLS for the area and find there are 30 sales of four units in the last 18 months.

Me thinks I should use those to establish the value of the subject. What do you think?

Why would someone use duplex units where there are four units that have sold? Is my thinking messed up?

Haven’t had a chance to get into the meat of the report yet.

Me thinks that this is going to cost some beaver pelts and a fox pelt on two.

 

[CANative]

Two units have higher owner occupant motivation. GRM's are much higher.

Seems like an easy review. The origional is totally discredited. Do your appraisal using 4 unit comps.

 

[stefan olafson]

The appraiser who did the appraisal didn't have access to MLS or the courthouse records. All he/she had was information provided by the client to support the value that was necessary to make the deal work!

Isn't that how we're supposed to do it ;-)

 

[Mztk1]

Why not just use single family houses and multiply the results by 4! :laugh:

 

[Mike Kennedy]

"Why would someone use duplex units where there are four units that have sold?"


Unless the H&BU was fully demonstrated as a duplex then -

'Cuz the 4 units didnt hit the bullseye. Fraud is what fraud does. Elmer Gump (Forests' second cousin on his dads' side).

 

[Wolverinefan]

Why not just use single family houses and multiply the results by 4! :laugh:

I like that answer!

 

[Ray Miller]

Why not just use single family houses and multiply the results by 4! :laugh:

You mean I been doing them wrong all this time. m2:

 

[CindyR]

Why would someone use duplex units where there are four units that have sold? Is my thinking messed up

I do a lot of review work. It seems to me that sometimes the comps are just whatever properties the appriaser already has in their comp database or in their copy file. Certainly not the best comps or the most similar comps or the most recent comps or the most relevant comps, just the easiest ones to stick in the report.

 

[Rufus]

Me thinks I should use those to establish the value of the subject. What do you think?

Ray,

I've read enough of your posts to know that you already know the answer to that question. :new_smile-l:

I think you posted this to give another example of what is going wrong in our profession.

 

[Michigan CG]

Bank just sent an appraisal over for review. They seem to think there is a problem with it. Me thinks there is a problem as well.

It is a four unit, the appraiser used duplexes for comparable sales and comparable rent.

I run the MLS for the area and find there are 30 sales of four units in the last 18 months.

Me thinks I should use those to establish the value of the subject. What do you think?

Why would someone use duplex units where there are four units that have sold? Is my thinking messed up?

Haven’t had a chance to get into the meat of the report yet.

Me thinks that this is going to cost some beaver pelts and a fox pelt on two.

It is a four unit, the appraiser used duplexes for comparable sales and comparable rent.

Are the duplexes in the same area and of the same quality of the subject property? From what you post, you live in rural Wisconsin. These two questions would be big factors in the puzzle.

Based on the fact that smaller tracts of land or investment properties tend to sell for a higher price/SF or unit than larger tracts/units due to sheer magnitude of the investment you might be correct. However, investors in smaller rental properties tend to be less educated than investors in larger properties. Therefore the use of 2-unit properties could very well produce a lower value depending on the specific market.

Another factor to consider is vacancy. If you own a four unit property and have one vacancy for an extended period of time you are losing 25% of your income. With a two unit property you have 50% vacancy, and might have a problem paying the mortgage.

Debt ratios might also be considered, and affect a cap rate (or what a banker will loan, and in what terms) in some properties. What is the loan rate on a duplex vs a four or six unit property? Significant, I would guess depending on the credit rating of the borrower and a credible appraisal.

These are things you need to consider, but of course I am playing devil's advocate.

Nothing is black and white in appraising.