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Medical Condo Vs Medical Office Building

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PS111222333444

Sophomore Member
Joined
Sep 2, 2010
Professional Status
Certified General Appraiser
State
Washington
Working on a fee split job for a mostly retired seasoned appraiser. The subject property is a <1,000 SF dental office condo. Boss doesn't like my comps. Wants to use a medical building converted from 1950s residence with site ratio 5 to 1. I don't feel this is appropriate - comments?

Thanks for the input!
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
On the surface, the suggested sale comp doesn't appear to be a good match.
Are your selected comparables better?
What is the argument to use the suggested comp?
 

PS111222333444

Sophomore Member
Joined
Sep 2, 2010
Professional Status
Certified General Appraiser
State
Washington
All of the comparables I provided were medical or dental condos, with the exception of one which was a general office condo and mostly open space. I adjusted this comparable upward for the increased cost /SF of med/dental TIs. With this client there is rarely an argument involved.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Then I don't see a compelling reason to include the suggested sale as a comparable.

I'd talk to the seasoned appraiser and ask why such a suggested sale should be included? Maybe there is something I'm missing.

Good luck!
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
You could use the freestanding building as additional info as a bracketing ploy but it's not going to change your opinions and conclusions. You'd basically be lifting your leg to show that you didn't completely ignore the substitution angle.
 
Joined
Jun 2, 2007
Professional Status
Certified General Appraiser
State
Florida
Working on a fee split job for a mostly retired seasoned appraiser...<snip>
Your question was answered very well above so I'd like to take a moment to encourage you to learn from this kind of experience. On a fee-split we balance making a good living with doing an exceptional job, don't we? You could easily make a career out of one appraisal if you aren't careful! I was very impatient in your position here, and sometimes it was too much - I let them have it!

However, I eventually made it to the point where I was billing $30K to $70K a month, consistently in the $40K range, and my appreciation for supervisors flipped - it had to. Having come from my own high-volume residential practice for more than 10 years and knowing that I wanted to keep ALL the fee again eventually, I began to think of supervisors as working for ME to prepare me to be completely competent on my own.

In this role I never considered a correction or instruction to be a criticism or imposition, no matter how inane. I resolved never to waste time arguing although I rejected ("fired") some supervisors when they demonstrated they clearly weren't gong to be good for me. They never knew why I chose to work with others, and I had never argued with them. There were also a couple that didn't want to work with me because they understood they were training their competition and I was more interested in the "drill" than writing the perfect report every time.

So, taking another look at this situation, you can learn about the market for these little "professional office" properties (frequently converted SFRs) and how they compare as alternatives to dental condos. I've learned that in some Miami areas they're actually preferred and, dentists will only go to a condo when one was not available. Condo's aren't worth as much in these cases.

You feel that you have enough condo comps, so I assume that they are "quality" data and true alternatives for yours. However, is there one of these little professional offices that "your" dentist-buyer might consider a better alternative because of, say, its very distinctive location? I can think of a couple of local submarkets where I'd have to consider them. Sometimes the buyer for your property is really buying the location it is in, and no condo outside will compare or at least tell the whole story.

Understand that you will probably never find me do this in one of MY dental condo reports, but there are certainly at least two observations you can make to help expand your experience: (1) these nearby professional office properties either do or do NOT align with condominium prices (how do you know until you try once?), and (2) you probably need to work with a different supervisor.

You seem very bright and unafraid to ask questions - two essential qualities of a successful appraiser - so don't think you know it all until you really do (lol). Get good and get fast so you always have clients that prefer you above others, and you can get their reports out on time.
 

PS111222333444

Sophomore Member
Joined
Sep 2, 2010
Professional Status
Certified General Appraiser
State
Washington
Thanks to all for the great comments! I researched the comps they wanted added and found that the converted SFRs were not purchased for medical use and the tenant improvements had no value to the buyer. So, not good comps after all. Ended up with the same ones I originally provided.
 

NachoPerito

Senior Member
Joined
Jul 25, 2012
Professional Status
Certified General Appraiser
State
Washington
Your dental condo was less than 1,000 SF. Were you able to find comps that small? It can be very hard to adjust for scale when you are analyzing it based on price/SF.
 
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