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Need help of long time experience

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Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
O.K. What I would suggest is what we do with stigmatized properties and that's to conduct a survey. Surely some of the local realtors have talked with the sales office and handled sales in the area. I would talk with them and cite your responses in the report as additional supporting data.

Good Luck

Roger
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
Got a situation similar, everybody that ever swung a hammer & has 5,000 +/- dollars is coming here & building houses 30 builder's in this 5.25 unincoperated area of Pinal County Arizona. all have at least 2 houses each going up. They can't figure how this can possiblly be making the house prices drop. WAY to many people are self employed supposedly business people that can not operate a calculator. Just came in from driving thru the neighborhood 7 SEVEN confirmed Repo's all less than 2 years old in town. These are confirmed there are probablly at least 7 more Another person in the RE field claims to have counted 67 for rent signs.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Crowley;

your question is in regards to a "Builders Model" in a flexing new project and is smaller in comparison to the new section (accoridng to you); the List Price was - $252,485 and the contract is for $237,400 and according to your findings is moving slowly & progressively.

my first suggestion would be to review past sales data in the original section of similar size dwellings and find the high & low during that period; secondly I would review the sale of the new section ( the larger units) and do the same. By reviewing this data it will tell you about the project without any "bias". The next step would be to see what furniture is sold with the units & without and those price differences and what was Sold with the model unit. *You should now have a full picture of this project.

you should be able to create (within reason) the builders so-called Entrepn.Profit from the start; the original model was used to provide a visual aid to new Buyers and therefore, was also a write off for the builder during that period of promotion. For the sale to take place at; $237,400 from an asking price of - $252,485 is less than 10% - I don't know if I would call that a "decline in value" - as it would be tuff to support that theory with the smaller units vs the larger new product.

in my past life (insurance industry) we would use a 10% Overhead & 10% Profit margin on replacement or repairs to residential housing.

You asked a question; this is my opinion; enjoy
8)
 

Lee in L.A.

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Interesting topic. This looks like a RED FLAG to me.

There are so many BIG houses sitting in this project for sale, some of them are now 2 years old and still vacant.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Pam,

Is this particular subdivision the highest priced in the area?
 

Alan Simmons

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
I encountered something similar to what you posted. A builder (only one in the subdivision) was discounting prices and therefore the available sales did seem to indicate that values were declining. However I noticed that the re-sales in the subdivision and similar new construction near the subdivision were not suffering the same decline.

Nosing around I learned that the builder was having money problems because of some other (very high-end) houses he was building in another town. His strategy was to quickly dump the houses in the subject subdivision to relieve some of the pressure. After the crises his prices returned to expected levels.

In essence the values never really did decline. The builder had just lowered one variable (price) to affectedly reduce another (time). In other words there was a shift along the value curve not a shift of the value curve.
 
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