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Need help regarding converted 3rd garage

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Georgia Hill

Thread Starter
Freshman Member
Joined
Jun 21, 2006
Professional Status
Licensed Appraiser
State
Oregon
I have appreciated all the expert advice you have given in the past; I have researched sites and haven’t been able to find an exact answer to my dilemma. I have been asked to appraise a SFR for Estate purposes (owner deceased; appraised value to be DOD 11/13/2007; daughter is inheriting, had been living in home with mother since mother purchased in August of 2006; client is working with a lawyer and per client the appraisal is to establish value for the estate and to provide proof of value so when and if she decides to sell down the road a benchmark will be established for capital gains purposes). I am going to use the GPAR form but here is my dilemma: house was purchased in August of 2006 (built in 2000) and had/has a 3 car garage; current owner divided 3rd bay of the garage into a 6x12 storage room and a 14x12 multipurpose room with finish similar to the interior of the house except that it has it’s own heat source (wall unit) and no air conditioning (entrance to multipurpose room is from interior of garage or backyard, not from interior of house); exterior garage door is still accessible and operable and is located in storage area. Conversion was completed with permits and has been finalized. Neighborhood and surrounding neighborhoods are a mixture of 2 and three car garages with 2 car being more prominent; there are no converted garages that have sold within 1 year but it’s not unusual to see garage conversions in this neighborhood; subject house is 3/2, 1520 SQ’. Question: how do I adjust a comp with a 3 car garage that has not been converted and how do I adjust a comp that only has a 2 car garage? All input will be MOST APPRECIATED. My opinion is that the home as currently is with the converted 3rd bay is the highest and best use for this neighborhood (art studios, hobby rooms, etc. are a plus around here). Thank you for your help.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
Georgia................................Geoooooorgia..... I've got Georgia on my mind!


;)


Ms. Hill,


I really needed to hum that tune!

Ok, first and foremost, thank you for the very excellent first post about the issue! Next a point and then a question. Let us not call that a “conversion,” we'll call it an “alteration,” instead. Why you ask? Well because none of that area you described has become GLA. It is just “other” space. This is because of the access and function of having to go through the unheated garage area or from outside to get to it. So it's “bonus,” room only.

The question. Describe your comp search? What I see happen all too often on the forum in such cases is the original poster tossed a brain hemorrhage in doing private party work and approached it like it was for a mortgage in trying to meet secondary market stuff. Have you considered this is non-mortgage work so you don't have to meet those kind of standards? That means you can easily mix in comps a year or two old if you have to. Or more than a mile, right? So if you have not done so, and you understand making time adjustments and good location adjustments if needed, go back and toss those search parameters open and look again for a similar comparable.

That 6 x 12 storage area sounds really like just the prior garage space chopped off by the addition of the 14 x 12 bonus room behind it right? This is not as tough as it seems. The market value will have a loss due to loss of the third garage space, offset by a gain from the bonus room being added. So your error rate in an adjustment should not be drastic. A comp with a two car garage brackets the subject with subject being superior correct? So you know you need a positive adjustment on that one of some dollar amount. The question would be is a three car comp equal, superior, or inferior? Have you considered trying to find a comp with a four car garage?

I see your ticket to be finding one of those others that did something similar, sold 18 months ago, and figuring out a good supportable time adjustment. This will show you what the market says about three car garages versus the subject. I don't know your exact location in Oregon, but 1,500 square foot houses with three car garages are a bit over-improved on the garage end in my areas. So your H&BU sounds reasonable to me.

Go try that comp search again in the morning.

Webbed.
 

mark jacobs

Freshman Member
Joined
Jan 20, 2006
Professional Status
Certified Residential Appraiser
State
Ohio
Good answer Webbed Feet

Georgia,

The 1500 SF 3/2 with a 3 car is heavy on the car storage for our area.

Webbed Feet has given you good advise, expand the search.

Also Webbed says yours is worth more than a 2 car, which should make sense since you indicate there are other conversions/alterations in the general area, meaning folks value this type of alteration.

If you find the 3rd space a bit of an over improvement, it would make sense the top end of your adjustment would be less than the cost of the alteration/conversion. Otherwise there would be investors willing to buy the 3 car homes convert them to bonus room and sell for a profit.
 

Otis Key

Elite Member
Joined
May 15, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
Over Hill, over dell (certainly not Dale) - couldn't resist - was doing my best to get that song that Mr. Feet brought up :leeann2:

Anyway, Georgia, he gave you sound advice there. Also, you might consider going back in time to see if there were other sales that might have been somewhat similar and extract a percentage ratio for a contributory factor.

Because it's for estate purposes means that fannie/freddie/ginnie/etc guidelines are sidelines. You can stray from them but don't forget to address them. The IRS (who might or might not get your report at some future point) also has guidelines and wants things explained as well.

BTW - since this is a "retrospective" appraisal, don't forget to EA it. And I hope you charged an adequate fee for those "un"anticipated questions by everyone in the future.m2:
 

John LaBelle

Junior Member
Joined
Jul 5, 2006
Professional Status
Certified Residential Appraiser
State
Massachusetts
I see your ticket to be finding one of those others that did something similar, sold 18 months ago, and figuring out a good supportable time adjustment. This will show you what the market says about three car garages versus the subject.


If you're going to go back 18-24 months to find a comp with a similar "altered" garage bay, I would look for a non-altered 3 car garage as well from the same time period. Compare these 2 to see if there is any measurable market reaction to the altered vs. non-altered garage.
 

Georgia Hill

Thread Starter
Freshman Member
Joined
Jun 21, 2006
Professional Status
Licensed Appraiser
State
Oregon
I appreciate all the advice....tried to respond yesterday afternoon but either my internet was not behaving or website was down - glad to see all is up and running this morning.
Webbed Feet: Thanx for the reminder that this is non-mortgage work - I did have my brain working in that direction....did more research and have pretty well solved all issues - thanks to your suggestions!
Mark, Otis and John: Thanks for the support of Webbed Feet's recommendations and additional advice - Otis, just checking, but I'm assuming EA stands for Extraordinary Assumption?
And....just so you all know, I am quite use to the song....it's nice to remembered!
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
It's just a different use of the same structure.

Call it equal to a comp with a 3 car garage, inferior to a comp with a two car garage and equal to a comp with a 2 car garage and a workshop or other accessory building similar in size and quality.
 
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