Oddball Property

[Jeffrey Blum]

I need some quick advice, I appraised a 1976 1,000 sq home and the owner has added a 2 story 2000 sq work shop, its attached to the dwelling, it matches the dwelling (same paint and design), he pulled permits and did a professional job, it can be converted into livable space if completed and some walls were removed. Problem is, there is absolutely nothing comparable to get value for this addition. All advice is welcome, thx

 

[Deleted member 77547]

Well I guess you'll have to consider whether its 1) an overimprovement relative the neighborhood housing stock. 2.) if it can be considered living area. 3) functional obsolescensce. 4) is he operating a business out of this workshop or is it for hobby? Check zoning in that case (workshop might be legal, but could be an illegal use.)

If it is an overimprovement, you might consider a reduced psf for the addition as unfinished space, if its warranted. How would the market react to it as it is?

 

[Lisle]

See the thread on this forum "Added SF, No Permit", posted today. The forum almost had a meldown over a converted garage.

This is a very complicated question. You might find some help on this thread.

 

[Jerry Bone Jr]

I need some quick advice, I appraised a 1976 1,000 sq home and the owner has added a 2 story 2000 sq work shop, its attached to the dwelling, it matches the dwelling (same paint and design), he pulled permits and did a professional job, it can be converted into livable space if completed and some walls were removed. Problem is, there is absolutely nothing comparable to get value for this addition. All advice is welcome, thx

Jeffrey, sounds like it might be complex. Might even be beyond your area of expertize. You sure you wanta do the appraisal?

 

[Lloyd Bonafide]

For your first post, and first question, you really should give us something easier than that. :new_silly:

 

[Webbed Feet]

I need some quick advice, I appraised a 1976 1,000 sq home and the owner has added a 2 story 2000 sq work shop, its attached to the dwelling, it matches the dwelling (same paint and design), he pulled permits and did a professional job, it can be converted into livable space if completed and some walls were removed. Problem is, there is absolutely nothing comparable to get value for this addition. All advice is welcome, thx

Mr. Blum,

Quick advice. Call your State appraisal board regarding licensing and USPAP issues before you accept this assignment.

Webbed.

 

[Jeffrey Blum]

Quick Response

Public record has not been updated on this improvement, which means I did not know about the improvement until I went out to the property. Just looking for some advice, thanks for not giving any.

 

[Charles Knutson]

Welcome to the forum, Jeffrey!

Several Questions --

Would the neighborhood support a 2000 or 3000 sf home, if the workshop were finished as living space?

Does the neighborhood have any homes with large oversized garages or workshops?

What I've seen in entry level neighborhoods in Denver is that buyers will pay a premium for large garages and workshops -- which are used as shop space for the homeowners business. In neighborhoods like these, there might not be demand for a larger house, but the workshop would have significant appeal.

In move up neighborhoods (and some entry level) there is a demand for larger homes, which would justify finishing the space.

In between the two options is finishing the second floor of the workshop, creating a 2000 sf home with a 1000 sf shop.

However -- since any remodeling would be so substantial as to exceed the 3% lenders guideline for cost to cure remodeling, it is best to value the property "as is", and discuss the potential upside for finishing this space as living area in the comment addendum.

my two cents . . .

 

[Jeffrey Blum]

Get Tough or Go Away, Right?

Thank you Charles, I appriciate your advice as well as all others who posted. I have notified the lender of the situation and they might not even want to proceed with the loan.(I am hoping). Looks like my next CE class is going to be "appraising the oddball". Thanks again to all.

 

[hastalavista]

Public record has not been updated on this improvement, which means I did not know about the improvement until I went out to the property. Just looking for some advice, thanks for not giving any.

Ok, here's some-
If possible, get in the habit of interviewing the borrower about the subject prior to going out to the inspection. It has saved me many a heartache to know what I'm going to be walking into rather than learning once I've already stepped in it (metaphorically speaking). :new_smile-l:

Good luck.