Most Probable Minimum Price

[Pa'akai]

Dont know if these will help or if its to late but here are some active listings of properties that appear to be similar

 

[Pa'akai]

And some more.

 

[Pa'akai]

Still more. Hope these helped. There were also a lot of creek/river front land on the loopnet site in the northern CA area. Sorry I dont have sales.

 

[CANative]

David

THANK YOU VERY, VERY, VERY MUCH. Those are great listings. There's even one in Lake County (it appears to be a collection of 20 acre parcels in and around a private lake and suitable for development, unlike the subject.)

The one in Nicasio is near John Lucas' spread.

 

[Hal Mann]

My bank has never had a problem with appraisal conclusions reported as a value of "no less than" $zzz,zzz,zzz, when it is appropriate for the property. Which it seems to be for yours.

On estate-type properties (by which I mean high-end and not that someone's passed away), I've often included verbiage that points out that properties such as this participate in a market that tends to stretch the definition of market value, as participants generally have both the means and inclination to be completely arbitrary about price. Because of this, a "no less than" value conclusion is particularly appropriate.

These estate-type properties tend to have extended marketing periods as well...

 

[Frederick R. Ruffell]

Originally posted by Greg Boyd@Mar 19 2005, 04:48 PM
(in my opinion and the opinion of most Realtors)

Greg you are an appraiser (and a damn good one), you have answered your own question. An appraisal is after all an opinion. Did you know that in court the "here-say rule" does NOT apply to appraisers? that is because so much of what we do (especially outside of mortgage origination) is here-say. What the market participants say they did and why is here say. I used to go on and on about Contingent Valuation Methodology on this forum but it fell on the deaf ears of the appraisers that let the forms and clients supplemental guidelines dictate their "final opinion of value". I think you need to express your opinion and give what support you have. If the client wants to send it out for review they certainly can.

 

[CANative]

(Note: this is a thread started over a year ago.)

Update

I came in at $1,250,000. They got a second appraisal from a CG out of Ukiah who came in at $1,350,000.

A few months later (May 2005) they put the property on the market at $2,750,000 and after 300 days (March 2006) it sold for $2,300,000.

I had a feeling it could sell for that much, I just couldn't prove it at the time.

Should I be embarassed about this? Has anyone else ever "missed it" by a million dollars?

This is the original thread about my problems in appraising this property.

http://appraisersforum.com/general-appraisal-discussion/90853-lakefront.html?highlight=private+lake

Ray and William probably had the best thoughts on this one.

 

[CANative]

There is currently a pending sale on the same road with a price of $1,600,000. 320 acres versus 120 acres and it's "private lake" looks like a 3 or 4 acre pond. Very similar farmhouse but arguably inferior outbuildings.

If you take off $400,000 for the additional 200 acres of surplus land, I'm thinking the 30 acre private lake contributed about a million dollars.

Here's a matched pair comp in case anyone else gets a similar project. LOL

 

[hastalavista]

Greg-

I agree with Andrew P.'s comment regarding the importance of intended user/intended use. In this case, since the subject is to be used as a security against a loan, and because of the complexity of the issues, it seems to me that establishing a minimum reasonable/most probable value is the appropriate course of action.

As to your comments/narrative in the report, I have to believe that a report like this gets kicked upstairs and around. Your client is in the business (I hope he isn't trying to broker the loan himself; if he is, all your work is going to be for naught, since a reputable lender will order a new appraisal to maintain appraiser independence), so he'll be able to push his loan agent into making sure the right people are reading your report.

Depending on the complexity of the assignment, I'll use several different approaches in my narrative. For this one, I think I'd summarize the entire story as the first statement in the addendum. I use this technique when I want to have a direct conversation with the lender. It doesn't replace the rest of the data, and much is redundant. But I attempt to write it in a non-technical (from an appraisal point of view) manner and more like I'm telling a story. UW's are pressed for time too, and a 1+/- page summary of the process, in non-technical language, may communicate more of the "story" to the reader than the rest of the fully documented data.

I'll make this part of the addendum stand out. I'll call it something like
SPECIAL COMMENTS TO THE UNDERWRITER/LENDER- PLEASE READ
if this is on page one of the addendum, it should get their attention.

Then, the story begines...
"This assignment was unique and complex for the following reasons.....
Initially, I completed my normal data and market analysis which comprised of.....
Due to the lack of similar sales (and similar properties), I then expanded my data research to consider.....
My comparable selection criteria was based on....... For this property and in this type of market, proximity/location was not a significant factor in comp selection; I did spend considerable time analyzing the differences in the local markets (if any) and have applied those adjustments as warranted.....
In the end, the comparables used best represent what a typical buyer for the subject would consider as a substitute, and the adjustments best reflect how that buyer pool reacts in the market.
Finally, even after completing what I consider to be an extensive analysis, it resulted in a wide range of adjusted values. I have no doubt that the subject's market value is represented within that range- however, to maximize the credibility of my report and to insure that the value conclusion best addresses my client's intended use (an opinion of market value used in consideration for a mortgage finance loan), I have elected to choose a pin point value at the lower end of the value range. In my opinion, this represents a minimal reasonable sale price for the subject.
I have provided specific and detailed data and analysis in the body of this report to support my conclusion."


IMO, such a short summary (or something like it) can go a long way in distilling a complex analysis into an easily digestible discussion of the problem, approach and solution.
Writing non-technical narrative reflects much of the writer's personal style, and yours may be significantly different, but I think you get the idea (and I'm sure your style is clearer and more concise!).

One last thing- I used to use the exact same phrase "conservative value", but stopped doing so even though there is no doubt in this type of assignment, my value would be "conservative".
However, after having to field calls from clients (and refuse calls from borrowers), explaining to them that I wasn't "low balling" the value, but that the subject property was so unique as compared to the comps, to provide the maximum support for my value, my value opinion at the low end of the adjusted range is appropriate, I opted to no longer use "conservative, if possible, in the context of my valuation.


Good luck!

 

[CANative]

Good stuff Denis, as usual.

This is no longer an active assignment. While researching data for another project, I came across the sale of this property I appraised more than a year ago. I don't know who appraised it for the recent sale or if there was even an appraisal done. It was apparently an all cash transaction.