Over-improvements

[hastalavista]

Welcome back Denis....I haven't seen you here for some time. I hope all is well.

Thanks, Curt!

All is well.
I've taken a self-imposed leave of absence but I think I'll be a bit more active now!

(thanks for asking!)

 

[Ray Miller]

Thanks, Curt!

All is well.
I've taken a self-imposed leave of absence but I think I'll be a bit more active now!

(thanks for asking!)

Glad to see you back as well I have missed your well balanced and informative answers to questions.

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Progression/Regression Theory


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P.S.. for a correct answer to your question look up "Burden on ownership" in any texts you happen to have. Not going to some superior neighborhood as your only solution. .. Oh, and then decide if the neighborhood, as you view it, is really the only exclusive "market" for this house.

I think the issue of your problem is not the house but the neighborhood. Determine what value the neighborhood would support (keeping in mind that a typical buyer will not pay a higher price in the subject's neighborhood past its support level but will go to a superior value-range neighborhood) and you've determined the maximum market value (for the typical buyer). The adjustment to be made is in the cost approach (if completed). There doesn't need to be an adjustment in the sales approach (necessarily). :icon_lol:


Agreed with both answers.

 

[J Grant]

Can you go back in time, see if any larger than typical homes have ever sold in that area? also, research recent listings, as well as cancelled, expired listings, and older listings. have large homes been placed for sale and not sold? That can help guide you whether there has historically been a positive or negative reaction to overly large homes. I agree with another poster that after a certain price point, a typical buyer will usually perfer to buy in a better/more luxurious neighborhood. A typical luxury buyer who wants to spend more for 7000 sf home, would perfer to spend it in a neighborhood with the prestige and amenities of other 7000 sf homes as neighbors.

If this your research shows the larger home to be an overimprovement in the subdivision, subject is located, you might find the largest comps available in the subdivision, say 4800 sf, and not adjust for the additional square footage of the subject. A buyer might not mind getting the additional square footage for the same price as a smaller home, and therefore be willing to pay the higher property taxes and upkeep. If there is a similar neighborhood of smaller homes, where a larger than typical home sold, that would be good comparison, but may not be possible to find.