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No Adjustment For Lake View?

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CindyR

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Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
Got a call from a long lost cousin buying a townhouse somewhere in Vegas. I told her I know nothing about Vegas but the question is generic. This is a two story townhouse in a gated lake community in an area surrounded by other lake communities. It is on a rather unique lot where it has a perfect unobstructed view of the lake in the next door lake community. So it's not their lake but they get the view. And the view is really great because the 2nd floor master bedroom has a balcony to enjoy said lake view.

But the appraiser said, and I quote, “no clear specific dollar amount was demonstrated in the current market, therefore no adjustment was given for subject's lake view”. Seriously? If it's not simple and obvious you don't have to consider it? Seems to me that I need to analyze older transactions in the community or similar transactions outside the community or come up with some supportable way to determine an appropriate adjustment for this very superior amenity.

Obviously we have Certification #9 – “I have reported adjustments to the comparable sales that reflect the market's reaction to the differences between the subject property and the comparable sales.” Does anyone believe this means only current and simple market reaction? When do we ever find a clear specific dollar amount? I think the appraiser didn't handle this properly. Comments??
 

Michigan CG

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Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
“no clear specific dollar amount was demonstrated in the current market, therefore no adjustment was given for subject's lake view”.


Looks like the appraiser explained their rationale. Without being familiar with the area it is hard to say he is wrong.

Let me give you another example. We have train tracks here, everywhere. No one cares. We have a neighborhood here that has always done well. On one of the streets one side of the neighborhood backs up to the railroad tracks. Three trains a day go behind those houses. No one cares and the sales prices show it. The ones across the street sell for the same amount as the ones that have the RR in the back yard.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
It is a problem with highly conforming neighborhoods.

When the initial developer starts out selling them all for the same price, it's hard to come back years later and say a couple of them are worth more because of a view that has been there all along. We have that problem with condos on a hill. The top floor of some of them have a fantastic view down the slope, across the valley to the next set of hills. Yup, they all sell for the same price. And really, if you work during the day, you only benefit from the view on weekends, so, if you want to stay home to look out the windows on the weekends, are you willing to pay extra money for the joy of the view? Or, would you rather spend your money out in the world doing other things?

.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Is the lake view only seen from upper story/balcony?

Normally a lake or positive view commands a premium, yet maddeningly, we'e all experienced situations where it doesn't...so who knows.
 

Bobby Bucks

Elite Member
Joined
Jan 27, 2002
Professional Status
Real Estate Agent or Broker
State
North Dakota
I fondly recall a company I used to work for that developed neighborhoods of tract homes. Valuing a retention pond view is a refined art. It may or may not be a premium depending on what has sold and what hasn't. One agent I know was a master at contradiction depending on inventory,
 

Peter LeQuire

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Joined
Jan 3, 2005
Professional Status
Retired Appraiser
State
Tennessee
That appraiser's comment reads like prudent, defensive appraising: I am increasingly more inclined to take the same tack I infer from it. Which is, absent reasonable data that indicates an adjustment for a particular attribute can be reasonably well supported, I will not make an adjustment, but will make an effort to account for its superiority/inferiority in reconciling the appraisal. For example, there may be no sales of units with water views in the victim property's development, but there may be some premium that can be found in nearby developments (competing or not) that attaches to such views: that information may not support or warrant a defensible, specific, adjustment, but it can be incorporated in a reconciliation that specifically addresses the lack of similar sales and the lesson(s) to be learned from other developments. (Which is another shortcoming of GSE underwriting of appraisals - for other work, the SC grid will accept text in the numeric fields.)
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
“no clear specific dollar amount was demonstrated in the current market, therefore no adjustment was given for subject's lake view”. Seriously? If it's not simple and obvious you don't have to consider it?
Looks like the appraiser explained their rationale. Without being familiar with the area it is hard to say he is wrong.
I have often had to resort to the "I found no market data to support an adjustment". Fact is, we have places like that. My best guess is that most of the lots sell for a premium anyway so the view is a secondary consideration. We have an industrial lake, renown for its bass fishing, but many lots have a view of the power plant and even can hear the plant. On a quiet night almost all the homes surrounding the lake can hear it, but many on the lower end cannot see the plant, but for the life of me I cannot recall any difference in land values between seeing the plant and not, and the land value of lots is typically very little premium over the rest. One tract, in fact, recently sold for barely $2000 an acre because it is steep and wooded with poor access, sits directly across from the plant, and had twin power lines over the middle. The adjacent owner bought it for buffer.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
But the appraiser said, and I quote, “no clear specific dollar amount was demonstrated in the current market, therefore no adjustment was given for subject's lake view”.

I wouldn't read too much into the "...in the current market..." comment. That doesn't imply to me that the appraiser didn't do some research. All it implies is that the appraiser found no basis to make any adjustment "now".
As others have said, perceived premiums for certain features can change over time and change based on market conditions.

As far as new-development premiums, out in my markets, builders will add a premium for a larger lot and they'll get it. Over time, it is very common for that premium to fade away (sometimes, the time-to-fade is the next day).
 

Tim Hicks (Texas)

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Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
What are the benefits of a far off lake view? Frankly, I would find it over rated for my own personal benefit. There is nothing to suggest the appraiser is wrong. Hoping for additional value for a view is not the same as actual additional value based on view.
 
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