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Over Improvement

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sylvanbeach

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Virginia
the property was appraised and found to be the largest dwelling in the neighborhood due to an 1000sq ft addition..the U-W states the property is an over improvement and wants me to comment if there is any impact on marketability. How do handle this?
http://appraisersforum.com/editpost.php?do=editpost&p=1513642
 

Michigan CG

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There should be no effect in marketability at the appraised value. The appraisal should take into consideration the overimprovement and the $/SF would tend to be lower than that of the comparables.

A pound of Mice sell for more per pound than does a pound of elephant.
 

xmtpedprl

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Tell him/her that it was an outstanding observation, and that you'll add that into the report asap!!

;^)

Dave...
 

Ray Miller

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There should be no effect in marketability at the appraised value. The appraisal should take into consideration the overimprovement and the $/SF would tend to be lower than that of the comparables.

A pound of Mice sell for more per pound than does a pound of elephant.


From my Equine Science Days. It takes more to feed 4 ton of mice then it does to feed a 4 ton elephant.

The first appraisal should have had adjustment made because of the principle of Regession/Progession. It should show some external obsolence due to the fact of the smaller homes in the area.

What does you stats show for the area? How much bigger is the home then the average or mean for the area?
 

444nutman

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The question I have is their similar homes that are similar size but have not sold recently. I just had a go round with a lender about that. The subdivision had homes with similar GLA but only 1 had sold in the last year which I used and explained myself. I stated that their are other homes with similar GLA but have not sold. Just because none have sold or been listed does not make it an overimprovement.
 

Mztk1

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Florida
The answer to this depends entirely on how the issue was addressed in the report.

Did you find a sale in a similar neighborhood that was also an overimprovement? Did you find an old sale in your neighborhood? Or, do you believe the house is NOT an overimprovement. If not, why?

I agree 100% with Tim. If you can sell the house for a price, it has no effect on its marketability. If you already took care of the discussion on the subject as it being oversized for its market, all the underwriter might be asking for is a simple addendum that reads: "The subject is oversized for the market, but there are no adverse affects on marketability", type of addendum.
 

Kevin A. Spellman

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Aug 30, 2003
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Massachusetts
I would state the typical or the predominant living area for the subject's area and the market segment. The over-improvement was created by an addition, so treat the area separately. If you get another similar situation in the future treat the over-improvement separately below at the bottom of the sales grid. The reader will know the original structure is the GLA and its overall utility is in the room count and down below at the bottom of the sales grid is the over-improvement area and its utility.
 

Big ole Boy

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Tennessee
In declining markets it would be most unlikely that additional space would have a contrbution value larger than 10% on the final anticipated selling price.

You could use such rational to develope an arguement for an upper limit to contribution value .... if useful paired sales data is unavailable .....

contribution value may be less than 10% .....

Or estimate value of subject without over-improvement ..... and state an estimated contribution value as a seperate figure and keep it out of final indicated value ......

......
 
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