Old home/new home?

[Jeff Horton]

Appraising a 50+/- year old home fellow is about to remodel. His plans are very ambitous and the bank wants the appraisal as if it is finished. Without going in a lot of detail if he does what he is proposing it will be bascially 4 original outside walls, floor and roof. Addition on the back and basically everything in the house will be new.

No sales of remodled homes to compare it to. My thinking is that most people are not going to pay the same as a new home. Maybe 90% of what a comparable new home would sale for. So I am thinking of using comps that are at least 5 years old to maybe 15 years old and all in good shape. I am thinking these is going to be my best comparables.

Anyone done one of these and maybe have a better idea?

 

[Randy Beigh]

Jeff

I assume the foundation is also 50 years old, and further assume, that new wiring, plumbing, and drywall are being added, and all the old is being pulled out.

I think you should work on the premise of effective age and not the actual age. However, sooner or later, much of this home is 50 years old. It would be hard for me to believe that no one else has ever remodeled a home, then sold it in your market area. So, that is the first thing I would look for. The problem with what you are talking about doing is the actual age of the subject and the actual age of a home that is 5-15 years old. They aren't in the same category in many ways, including appearances and functional utility. A house with an addition is rarely as good as the same size home built that way.

If there is a shortage, then mix and match. Find something that is 70-80 years old that has been remodeled, find something that is newer that has been remodeled, a house that burned(or badly damaged) and rebuilt. Then when all that has been done, use a newer home as 4th or 5th sale. Another house with an addition is also worth looking at. Go further back in time and further away, if need be.

Hope this helps and good luck.

 

[jtrotta]

Jeff

will agree with Randy for the most part and add in a little additional, as we have plenty of "rip outs" here. One of the things I have found interesting over the years, is that when these jobs are completed and rest for a year or two, they may fetch an even higher value than new construction and I've seen that. It is a quirky deal, as you may note, houses of older style were generally built when the woods used were "air dried" , thus providing minimal shrinkage and generally better wood flooring than you can get today. Also, I would agree with Randy in regards to gathering a myriad of sales; new construction and older sales from all over to see what the "Market" says.

8)

 

[Richard Carlsen]

It is important to use similar size and style houses even if you don't have one in similar condition or with similar effective age if you adjust on that basis. You also may not be able to bracket the value due to not having a sale in as good a condition with a higher sales price. I would take what I have and explain the problem in the report. Then I would flood the report with comps. I did one of these about a year and a half ago in Charlevoix and there was nothing to compare it to but good condition houses with little better than below average effective age. I laid the problem out in the report and then used the 6 best comps I could find. Looking at the report I, actually used 7 comps. Two bracketed but they had marginal relevance. They were from the same town so I put them in. I relied heavily on the cost approach in pointing me at final value. Interestingly enough, my final value was very close to that estimated by the owner and the Realtor involved in the sale of this run-down property.