Most Probable Minimum Price

[hastalavista]

This is no longer an active assignment.

Just call me "Triple-D": Day late, Dollar short Denis!

 

[CANative]

Just call me "Triple-D": Day late, Dollar short Denis!

Nevertheless, I appreciate your comments because they have helped me with the current assignment I'm scratching my head over. I spent most of the day yesterday trying to figure it out.

It's a lakefront property in a kind of weird area that has characteristics which could be seen as negative or positive (brutal access but great privacy, seclusion and views.)

One or two reasonably recent sales but lakefront property has been increasing at an alarming rate due to rich buyers from out of the area who "have to have" lakefront homes for either trophy properties or perceived investments.

My gut feeling (and interviews with my Realtor contacts that I trust) says over a $1mm and under $1.2mm. This is mostly based on the improvements, which consist of a 2,330 sq. ft. log house of excellent quality. The recent sales are similar lots but the improvements are a single wide mobile, and a 1,500 sf older two story of only average quality and design. There's plenty of lakefront sales of between 1 million and up to 2.5 million but I have to go to other areas of the lake and some of those areas are recognized as premiere neighborhoods in addition to not having the rugged, fireroad access (subject is accessed by a network of fireroads which criss-cross lots several times due to the steep slopes.)

I'm using the SW mobile sale as a basis for developing land value for the subject but it sold for $399,000 and a recent sale of a similar lot sold for $150,000. :Eyecrazy:

The house is large, but "normal" GLA adjustments don't get this property into the range I think it should be. When I change the GLA adjustment to the full price of building the house ($175 to $200 psf) it does the job and brings it into range of luxury houses elsewhere. For the premiere neighborhoods, I have some matched pairs (not truly matched but good enough for this area) of similar improvements and the locational factor is about $300,000. Using those sales and making the location adjustment kind of evens out the adjusted sales prices.

Still thinking on this one.

 

[Mike Boyd]

Greg.....what does the actual sales price of your original appraisal problem property tell you about your appraised value other than just "it was low?" What have you learned and what are you going to change for future similar assignments? What did you "leave out," if anything, that accounts for the extra $1,000,000?

For Edd and Cynthia, our in-house attorneys, what is Greg's liability for "missing the mark" by a million dollars? Is the liability the same for a low appraisal as a high appraisal? Consider that the low appraisal might have stopped the refinance and made it necessary to sell rather than to keep. Loss can be measured in ways other than money, dontcha think?

I'm not trying to put Greg on the spot because he certainly went well beyond due diligence to finish the report. But, what can this teach all of us about unique, "white elephant" properties?

 

[CANative]

what does the actual sales price of your original appraisal problem property tell you about your appraised value other than just "it was low?" What have you learned

That there's an *** for every seat.

 

[hastalavista]

That there's an *** for every seat.

Mike-

Do you always put up with this kind of wise-guy comments from your former trainees?:laugh:

 

[KenRossman]

That there's an *** for every seat.

And sometimes, for reasons no sane person will comprehend, they will pay idiotic prices, with no real support from the market, just because they can.

Also, FWIW, on the right coast (Long Island, NY), properties with panoramic views (and no navigable water) will often sell for far more than otherwise similar properties with navigable water and a crappy waterview.

I wouldn't lose any sleep over it....

 

[CANative]

Also, FWIW, on the right coast (Long Island, NY), properties with panoramic views (and no navigable water) will often sell for far more than otherwise similar properties with navigable water and a crappy waterview.

That principle is a cousin of the *** theory. Most people nowdays would rather sit on their asses and look at the view than get in a boat and go sailing.

 

[Ms. Janet]

But, what can this teach all of us about unique, "white elephant" properties?

the only message i see here is that the market will eventually catch up to the listing price if you want to wait it out..............

the owner had 2 appraisals completed on the house based on solid data, they listed it for a million dollars higher and it sat on the market for 300 days.................so what??????????

 

[Mike Kennedy]

The house is large, but "normal" GLA adjustments don't get this property into the range I think it should be. When I change the GLA adjustment to the full price of building the house ($175 to $200 psf) it does the job and brings it into range of luxury houses elsewhere. For the premiere neighborhoods, I have some matched pairs (not truly matched but good enough for this area) of similar improvements and the locational factor is about $300,000. Using those sales and making the location adjustment kind of evens out the adjusted sales prices.

Sounds like "normal" led you astray - and these represent the most similar........not much else to "think about". detail and support necessity for location adjustments. have a beer.