Net/Gross Adjustments - greater than 100%; is this possible/acceptable

[NJAPRAZE]

reviewing a very detailed appraisal for an ATYPICAL property... what are your thoughts???

subj is a 10,000 sf [signif above-avg GLA] historical 4-unit multifam dwelling that is also a premium riverfront property w/water view, has above-average amenities, and situated on abv-avg acres/site.

NOTHING like it -- even when search expanded 25 miles (also atyp for a high density area)

Subj has higher appeal as a SFR / estate home & is in a 1-unit SFR zone (2-4's = grandfth use) -> thus, 2-4 fam is indica to be H&BU

The val range for 2-4 fam units (typ sf = 1000-3000 sf) is 100k - 350k -> so subj's estim val clearly is an outlier

To complt SCA, this is what appsr did:
- blended a 16 comps/listings showing mix of "best local multis", at least one multi that was a similar riverfront prop, most comparable "SFRs" in both muni and/or were similar waterfronts, at least 1 SFR that possessed sim GLA
- result is a "range of prob value"

However -- due to significant differences [in size, lot size, location, amenities, etc.] this resulted in some comps having gross/net adjustments 100%-200%; as part of review -- I've researched what comps were avail the OA appsr and generally agree with those selected, as comp data is a) limited and b) due to subect's atypical combo of value impacts

Given the above-- are such [high %] adjustments reasonable?? Has anyone run across a situation/instance like this?

 

[Tom D]

and your other option is what? you deal with what there is, and explain. it is always at the discretion of the lender/underwriter to accept it, or not.
going further distance, or longer time? if that helps as support of your value, ok. still doesn't change that it ain't a pretty appraisal.

 

[glenn walker]

reviewing a very detailed appraisal for an ATYPICAL property... what are your thoughts???

subj is a 10,000 sf [signif above-avg GLA] historical 4-unit multifam dwelling that is also a premium riverfront property w/water view, has above-average amenities, and situated on abv-avg acres/site.

NOTHING like it -- even when search expanded 25 miles (also atyp for a high density area)

Subj has higher appeal as a SFR / estate home & is in a 1-unit SFR zone (2-4's = grandfth use) -> thus, 2-4 fam is indica to be H&BU

The val range for 2-4 fam units (typ sf = 1000-3000 sf) is 100k - 350k -> so subj's estim val clearly is an outlier

To complt SCA, this is what appsr did:
- blended a 16 comps/listings showing mix of "best local multis", at least one multi that was a similar riverfront prop, most comparable "SFRs" in both muni and/or were similar waterfronts, at least 1 SFR that possessed sim GLA
- result is a "range of prob value"

However -- due to significant differences [in size, lot size, location, amenities, etc.] this resulted in some comps having gross/net adjustments 100%-200%; as part of review -- I've researched what comps were avail the OA appsr and generally agree with those selected, as comp data is a) limited and b) due to subect's atypical combo of value impacts

Given the above-- are such [high %] adjustments reasonable?? Has anyone run across a situation/instance like this?

Yes many times on extremely complex-atypical properties where there are no truley comparable sales .
And no it will not fly with a typical GSE type lender or one planning to sell the loan in a secondary market
and normally only a Portfolio Lender- Private party or Cash. But yes it can be reasonable ? I have seen Beverly Hills 15,000 to 20,000 Sq.Ft. Type Mansions with 200% adjustments and done by MAI and SRAs.

As far as reviewing it with an- opinion of value no way in hell- I won't do it because that type of property if appraised by three different appraisers would have three different opinions of value Note: Many inexperienced GSE type loan production appraisers may even under value it by trying to keep their Net and Gross adjustments at substantially lower Net-Gross Percentages trying to force the percentage of adjustments downward. In REAL appraisals not constrained by GSE or Lender Guidelines this is how its done.
I assume the same in Extreme Rural Properties. On a Review my hard Question would be are there really no similar sale's comparables's ? If none are found then I can live with the 100% adjustments .

 

[TerryRohrer]

There is nothing sacrosanct about the level of adjustment percentages. We would all prefer less to more, but any proposed benchmark is entirely arbitrary. If I were appraising something like that, I would rely almost entirely on the income approach and ensure that I nailed its elements. I would not rely on income multipliers and would not rely on the sales comparison approach.

 

[NJAPRAZE]

Yes many times on extremely complex-atypical properties where there are no truley comparable sales .
And no it will not fly with a typical GSE type lender or one planning to sell the loan in a secondary market
and normally only a Portfolio Lender- Private party or Cash. But yes it can be reasonable ? I have seen Beverly Hills 15,000 to 20,000 Sq.Ft. Type Mansions with 200% adjustments and done by MAI and SRAs.

As far as reviewing it with an- opinion of value no way in hell- I won't do it because that type of property if appraised by three different appraisers would have three different opinions of value Note: Many inexperienced GSE type loan production appraisers may even under value it by trying to keep their Net and Gross adjustments at substantially lower Net-Gross Percentages trying to force the percentage of adjustments downward. In REAL appraisals not constrained by GSE or Lender Guidelines this is how its done.
I assume the same in Extreme Rural Properties. On a Review my hard Question would be are there really no similar sale's comparables's ? If none are found then I can live with the 100% adjustments .

Good input; 1st time I've seen such high % adjustments... but agree that theyre warranted given subj's atypical attributes & limited data; market is what is is

 

[NJAPRAZE]

and your other option is what? you deal with what there is, and explain. it is always at the discretion of the lender/underwriter to accept it, or not.
going further distance, or longer time? if that helps as support of your value, ok. still doesn't change that it ain't a pretty appraisal.

OA was for private port lending

 

[glenn walker]

There is nothing sacrosanct about the level of adjustment percentages. We would all prefer less to more, but any proposed benchmark is entirely arbitrary. If I were appraising something like that, I would rely almost entirely on the income approach and ensure that I nailed its elements. I would not rely on income multipliers and would not rely on the sales comparison approach.

Almost no lender will use Income Only on a 4-unit multifamily dwelling on land.

 

[glenn walker]

OA was for private port lending

I have seen 100% View Adjustments alone at High End Malibu Beach Properties

 

[TerryRohrer]

Almost no lender will use Income Only on a 4-unit multifamily dwelling on land.

I don't disagree with that! I would cross that bridge before accepting the assignment.

 

[Dublin ohio]

What does the income approach say. I have done portfolio loans for 2-4 family properties that had ridiculous adjustment ranges for different reasons. The sca although supportive. Basically became an attachment to the income approach.