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overdeveloped vs disimilar

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Suzanne K Hansen

Sophomore Member
Joined
Aug 31, 2002
Hi all,

This is about a rural gorgeous adobe-style place I am appraising. The question is: is the house overdeveloped or is it disimilar in quality and design to close proximity homes? The comps I've chosen on this house are mostly in the hills around the valley where the house is located. The house itself is on one of the smaller hills and is accessed from the valley whereas the comps up in the hills are accessed from the other side of the hills. The area in which the house is located is around a bend in the valley, one the side of the bend where the house is located is a natural wildlife preserve, lake, stream, and no houses farther down from it for 2.5+ miles. If you go back the other direction 0.5 miles from the house, around the bend in the valley is an area of older, poorer quality homes in a relatively wet area where three streams join into the lake. There is also a casino at this junction. Up the valley, are small homes for the most part and a nuddist colony.

My supervisor suggests that proximity is more important and says my comps should come from the closer valley are. He also suggests that the house is overdeveloped and needs to be taken into account.

My contention is that it is not similar to the closer area, and that the homes 2.5-3 miles away up in the hills surrounding the valley are more similar in neighborhood character.

Please help, the lender wants his appraisal asap. and I'd like to slavage my trainee-supervisor relationship, while providing an accurate appraisal of the home.

Thanks

Suzanne
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Suzanne,

Try using 4 comps - 2 from the area your supervisor wants to use and 2 from the area you want to use. After all else is adjusted for, if this doesn't give you a pretty good idea of the location adjustment(s), add one more comp from each area to help figure it out.

Hope this helps.
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
Suzanne:

It is my understanding, that since fair lending was initiated, we no longer limit ourselves to neighborhoods or even developments for that matter but instead look @ market areas. It makes sense to me. If someone were looking for a 3,000 SF home in a particular development & none were available, would they settle for a 1,500 SF home within that development or would they likely go 2-3 miles down the road to a different development located in a similar, alternative, competing market area. My guess is they would do the latter. With limited info, it sounds to me like you are on track.

BTW, is this property located out in the Alpine area or is it along I 8 where that new casino is located.?
 

Suzanne K Hansen

Sophomore Member
Joined
Aug 31, 2002
I went back and looked at three comps from near and three comps farther away, adjusted, as needed, the close ones, and the value for the subject showed a 20,000 difference between the 2 sets of neighborhoods. My inclination at this point is to pick the most conservative value (which I usually do) and include both "sets of compa with an explanation of the differences in neighborhoods.

What do you think.

Larry,

"BTW, is this property located out in the Alpine area or is it along I 8 where that new casino is located.?"

I don't want to give away too much, but you're close, not right on, but close.


Suzanne
 
A

Anonymous

Guest
I was in Alpine a couple of months ago, I drove all over the area. Where is the Nudest Colony?
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
I would use more than 4 comps, especially if you are going outside of the immediate subdivision. Sometimes that won't work. I've got a similar problem with a client now - gave them 6 comps. They want a sale from the subdivision (if there was one, I would have provided it). More data rather than less is better, along with a LOT of explanation. You'll go towards a short form narrative in your comments section, but it's better to explain your thought processes in the original report. Saves addenda and questions later.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Personally, I would have guessed the Barona area.... BTW, they are more prevalent in the north county area than in the east county area.

There are several types of adobe construction in SD county. The really old stuff built prior to 1940, which are mostly the genuine article. Then there are the homes built between 1950 - 1980; most of these are of basically conventional construction with adobe veneers. Finally, there is the newer version of adobe construction, mostly a faux-adobe built as a designer imitation. I once appraised one (pre-WWII built) right off of Hwy-94 that had reportedly been used as the local cat house (if you know what I mean).

Adobe construction is genuinely not an overimprovement in these areas, even though their costs usually exceed the norm. I wouldn't worry too much about using regular frame/stucco construction as comps as long as they are otherwise of similar quality and utility. The thing to remember about a true abobe is that there is no remodeling potential and maintenance can be very expensive. In the situation you describe, I'd try to find at least one comparable of similar size and construction, even if you have to travel a bit. Other than that, use your best judgment and I'm sure it will all turn out okay.

One other thing. An appraisal is an appraisal. It is the appraiser's opinion of value. When we as appraisers try to categorize one of these opinions as being either aggressive or conservative, it makes it looks like our opinions are subject to change depending on the use of the appraisal. "Aggressive" for a sale, "Conservative" for a refi or tax appeal. I tell people who ask for either an aggressive or conservative appraisal that I only appraise one way. I don't want them to think their interests are going to influence my opinion. IMO, the surest way to impeach your own credibility is to suggest that your opinions are made on a sliding scale. I realize that some appraisers think that they're supposed to be acting in the interests of their clients, especially when it comes to mortgage lending; and that rendering a conservative opinion works to the lender's advantage. However, doing this only removes some of the responsibility for their decisions from their shoulders to our shoulders. IMO, appraising to the appraiser's best opinion is acting within their client's best interest.

You're just starting out and I'm sure your supervisor is trying to impress on you the importance of not over-valuing properties for lending situations, which is a very good ethic to have. However, the flip side of it is that under-valuing properties is also a problem to be avoided because people can get hurt. The worst scenario is when appraisers go high for some cases and low for other cases. This lack of continuity and consistency will eventually come back to bite them. I don't think this issue is worth arguing with your supervisor over, just keep it in the back of your mind and try to refrain from letting your clients' interests significantly affect your own opinions or using phrases that some people might mistake for that.


George Hatch
 
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