• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Need help with a trashed house

Status
Not open for further replies.

chrisandres

Thread Starter
Freshman Member
Joined
May 26, 2006
Professional Status
Certified Residential Appraiser
State
Indiana
I have a bi-level on 8 acres. The house has been vacant for 8 years. The house has several problems; severe vegetation overgrowth around the house, mold ($60,000 estimate for the lower level only), leaking roof, cracks in the foundation, drywall damage from the leaking roof, floor coverings are severely soiled and stained, plumbing leak under the sink has damaged hardwood floor and subfloor, cabinets are trashed, etc.

Here is the question.

It seems to me that the value is in the land and the highest and best use is to remove the house. What is the best way to report this (vacant land form with comments about the house and condition or 1004 to describe the house in more detail then use vacant land comps)?

Also

Is there a formula for making the determination as to whether the house is salvagable? I've been an appraiser for 10 years and this one is baffling me. Thanks in advance for any help!! I greatly appreciate it!!
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
Do the cost approach, but do it correctly....

Where do we arrive at the value of the underlying land in the cost approach? From the market right? So select the best most comparable vacant land sales, make the proper adjustments and arrive at a value of the land. Then use Marshall Swift or another cost service to determine cost new of the improvements.

Then you may have to step outside of MS to find 'cost to cure', not just a guess but hard numbers to repair the mold damage, the cabinets, the leaks, the overgrowth, etc... I think you will probably find the cost to cure (depreciation) exceeds the cost new. If that happens you can show what the cost to remove the structure will be and be able to call the H&B use as vacant land with improvements removed/destroyed...
 

Kevin A. Spellman

Senior Member
Joined
Aug 30, 2003
Professional Status
Certified Residential Appraiser
State
Massachusetts
Would a typical buyer build the same house on a vacant eight acre parcel? Would the property sell faster if the house was removed? Would the property only be attracted by an investor or a builder to re-sell? Would the home attract a buyer if the interior was removed? Profile the buyer and you may be able to answer the question.
 

A New I T

Freshman Member
Joined
Aug 12, 2008
Professional Status
Certified General Appraiser
State
Colorado
Dont forget to consider the cost to scrape the house. I have seen costs to remove a house over $50,000. but typically around $20k to $30k. Check M&S costs for Demo costs-it in there, and call a local developer that has scraped a few of these things when they put in a new development. Commercial appraisers in your market that do subdivision analysis should have some costs too. As to the report a good summary appraisal report-narative format- is always fun. Check with the lender. If you decide to go with a form be very detailed and prove your point to the reader!

kevin
 
Last edited:

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Do the cost approach, but do it correctly....

Where do we arrive at the value of the underlying land in the cost approach? From the market right? So select the best most comparable vacant land sales, make the proper adjustments and arrive at a value of the land. Then use Marshall Swift or another cost service to determine cost new of the improvements.

Then you may have to step outside of MS to find 'cost to cure', not just a guess but hard numbers to repair the mold damage, the cabinets, the leaks, the overgrowth, etc... I think you will probably find the cost to cure (depreciation) exceeds the cost new. If that happens you can show what the cost to remove the structure will be and be able to call the H&B use as vacant land with improvements removed/destroyed...

Good response and advice, Stefan.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
IF as you say it has black and gray gunk growing in it you will need to figure a higher cost to have the home removed and the black and gray gunk sent to never never land. Not a simple tear down and haul away.
 

NUTSaboutAPPRAISING

Sophomore Member
Joined
Feb 28, 2006
Professional Status
Certified Residential Appraiser
State
Florida
I have a bi-level on 8 acres. The house has been vacant for 8 years. The house has several problems; severe vegetation overgrowth around the house, mold ($60,000 estimate for the lower level only), leaking roof, cracks in the foundation, drywall damage from the leaking roof, floor coverings are severely soiled and stained, plumbing leak under the sink has damaged hardwood floor and subfloor, cabinets are trashed, etc.

Here is the question.

It seems to me that the value is in the land and the highest and best use is to remove the house. What is the best way to report this (vacant land form with comments about the house and condition or 1004 to describe the house in more detail then use vacant land comps)?

Also

Is there a formula for making the determination as to whether the house is salvagable? I've been an appraiser for 10 years and this one is baffling me. Thanks in advance for any help!! I greatly appreciate it!!

hi chris,
while on site, i would take lots of photos. then i would speak with the lender and discuss their options:1. do a land appraisal with cost to remove/destroy dwelling. 2. do a 1004 with segregated cost to cure of everything that needs work/rebuilding and your opinions of value to reflect: as-is and as-repaired. let the lender decide which would suit his purposes or whatever is in the scope of work. this way you and the lender are on the same page and you won't be doing additional work if the lender changes his mind later on. finally, quote a reasonable fee for your increased work !!!
good luck with all..
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Call Armando Montelongo.
 

The Warrior Monk

Moderator
Staff member
Moderator
Joined
Mar 30, 2005
Professional Status
Certified General Appraiser
State
New York
Highest and best use will determine how to appraise the property. Often in the case of severely dilapidated homes, it is simply easier to raze and start anew than fix what is there. This is especially true when the estimated costs are high, and could likely run higher, such as in the case of mold remediation.
 

Metamorphic

Senior Member
Joined
Mar 15, 2008
Professional Status
Certified Residential Appraiser
State
California
Dont forget to consider the cost to scrape the house. I have seen costs to remove a house over $50,000. but typically around $20k to $30k. Check M&S costs for Demo costs-it in there, and call a local developer that has scraped a few of these things when they put in a new development. Commercial appraisers in your market that do subdivision analysis should have some costs too. As to the report a good summary appraisal report-narative format- is always fun. Check with the lender. If you decide to go with a form be very detailed and prove your point to the reader!

kevin

I've often wondered WRT to demolition...... Can you donate the house to the Fire Department as a charitable contribution for them to use as a controlled burn training exercise, then take a deduction for the value of the house and the cost to remove the ash?
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks