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Proposed - Overbuilt - What a MESS!

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Pamela Crowley (Florida)

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Jan 13, 2002
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Retired Appraiser
State
Florida
The following are the comments I have in the addendum... so far. I've already done a pretty good and complete job on Neighborhood description and Market Conditions describing this market area without going into the details I've included in the next couple of sentences. Subject is proposed construction of over 3200 GLA on 5 acres down a small dead end road with all old single wide, mainly pre-HUD code with all 'amenities' :roll: in their yards that are typical for those type of properties. The only conventionally built house I saw might have originally been a slave cabin from some long gone plantation. There is no way I can make the value they want and I'm looking for feedback that might make this better, more understandable, keep me legal, etc. All comments welcome!

• URAR: Condition of Improvements:

Subject is a proposed single family residence to be built with good quality materials and workmanship. This appraisal and report is based upon a hypothetical condition that the proposed dwelling is new and finished per provided plans and specifications as of the effective date. The bonus room over the detached garage is not planned to be finished but will be pre-plumbed for a full bath and kitchen plus ductwork for HVAC. The upper right rear bedroom will be roughed in including exterior wall insulation and ducted for HVAC but will not be finished. The estimated market reaction is approximately $5,000 for drywall, trim, paint and floor covering. No or external obsolescence noted.

The proposed dwelling is larger and more expensive than what is typical for this market area. This market area is diverse in the size, age and construction of the residential dwellings. There are some properties similar to the subject scattered through this area. The majority of residential properties here are much smaller and less expensive and there are quite a few manufactured homes. The effect on the subject property currently being an overimprovement is expected to diminish as more dwellings that are similar to the subject are built through the next number of years. The functional obsolescence cause by the subject proposed dwelling being an overimprovement in this market area is currently estimated at $50,000.


• URAR: Sales Comparison Comments

Equal weight is given to all three comparable sales and all are in the subject market area. Proximities are over 1 mile which is usual where sites are typically acreage parcels. Total net adjustments exceed guidelines for sale #1; total gross adjustments exceed guidelines for all 3 sales. There are no new builder spec homes of this size in this area as most are built after the owner purchased the land. There are other similar properties here but no others that were sold recently were located. All comparable sales are considered superadequacies, ie: would cost more to reproduce than what they sell for, and deemed the newest, nearest, most similar qualified and verifiable sales found at this time. All other sales found and considered were further in proximity and/or additional adjustments would have been necessary causing even higher total net and gross adjustments.
 

David S. Roberson

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Gold Supporting Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
That should be more than enough to satisfy any underwriter; it certainly gave me an understanding of the neighborhood and the Subject market. However, wanna bet they don't ask for more anyway?
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Your comments sound pretty complete, but the UW may want photos of other near by, similar homes. Not sales or listings, but photos to prove that other similar homes do exist. I have had that request before! :roll:
Mell.
 

Tiny280

Sophomore Member
Joined
Jan 17, 2002
Professional Status
Licensed Appraiser
State
Ohio
That last post is good advice. If possible, try to confirm the cost of construction of one or more of the built-on-owner's-site properties through the contractor or owner. I've had to use that type of comp on a couple of occasions as additional support - 4th comp. No problems so far.
 

Pamela Crowley (Florida)

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Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Thanks to all answers.

I did take some photos of other existing large houses and will provide them if they ask. I am expecting it.

Do you deduct for the functional in the cost approach? I did. Spent half the night reading all my appraisal books regarding overbuilts and superadequacies.
 

Tiny280

Sophomore Member
Joined
Jan 17, 2002
Professional Status
Licensed Appraiser
State
Ohio
That would depend on the local market.

In my area (Central Eastern Ohio), there are many mansions built in close proximity to single wides and shotgun shacks. In most cases, there doesn't appear to be a material functional (external :?: ) obsolescence issue. That's not to say that the market doesn't react to the unattractive neighbors, but that reaction is mostly reflected in the site value, which would be MUCH higher on a road lined with nothing but mansions.

But that's just this market area. I'm sure others have noted different local market reactions in their areas.

I seem to recall that there was a lengthy discussion of market acceptance of mid-market homes in close proximity to a mobile home park a coupls of months ago. I think that appraiser determined no megative market reaction - but that may have been a NICE MH park :wink: . You might try searching the archives.
 

bradellis

Member
Joined
Jan 16, 2002
Pam,

You told us that the superadequacy is $50,000.

YES, this belongs in the cost approach- absolutely.

I also have a question: If you think the undrwriter will call for pix of those other over improved homes, why not include them in the first place and avoid the phone calls?

Brad
 
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