Question on my Big Log home Appraisal

[Ray Miller]

:? Back to the big brand new log home, with 20 inch logs, 1,589 sq.ft.. Living space, 1709 sq. ft. basement with storm shelter and 2,688 sq. ft attached and detatach garages'. Small village 1/2 acrea lot. To much home for the neighborhood.

Researched my comparable’s, they are 40 to 50 miles away to the north in a recreational area and resort area. Two are well over 30 years old, 715 and 900 sq.ft and are in a rural lake region, setting on acreage, sold for $96,000 and $99,000. The third is one year old, 2100 sq. ft and sits in the center of a four season resort, sold for $250, 000. No comparable’s can be found in the initiate area, of the subject or any sitting on a city/town lot. Other comparable’s can be found to the S.E , 200 miles away or to the N.E. 200 miles. Next to the big city. Different market. There are six log homes in the initiate area on the market but they are not selling, some have been on the market for over a year. Went back as far as two years for sales. None on the books. Spent all day yesterday pouring over the comp books and taking to all the brokers with in a fifty mile radius of the subject. Nothing at all showed up. None on the four MLS systems in that fifty mile area, except what I have.

Found one in the area that was near the size and garage space that was too close on 10/25/02 the realtor said. It did have 35 agriculture acres with it and was new this year. When I got out there the man was really up tight. Because the people had back out of the deal. They found out as I did, that it was a log sided house not full logs. Selling price was $277,000. :evil:

Marshall/Swift brings the property at $300,600 through there auto system and manual calculation. The lender wants no comparable’s with more then a 10% net adjustment or 20% gross adjustment. Right now I am at 26%/44%, 9%/17%,17%/95% on adjustment. :?:

Because the subject is new. Do I bing it in at the Marshall/Swift value? :idea:

 

[Dave Smith]

"The lender wants no comparable’s with more then a 10% net adjustment or 20% gross adjustment."

What the lender wants and what you can give him (her) are often two different things. Neither Fannie nor Freddie mandate the gross/net amounts. Both say "give us the best you have for data and the explain, explain, explain..."

I say, "Value the property based on what YOU think it is worth." You are the expert in your market. The LO isn't, unless they are a good appraiser too. It becomes an underwriting issue, not an appraisal issue. Maybe the property isn't "fixed rate" material.

Your percentages are better than some of the ones I end up with in this area for similar properties.

 

[Jeff Horton]

Because the subject is new. Do I bing it in at the Marshall/Swift value?

I say NO. If there is not a market or a very limited market then what happens when it goes into foreclosure and they can't sell it? They come back to you and aks why. Cost doesn't equal value.

Tell them what it's worth. Not what they want to hear.

 

[Mountain Man]

M&S is great, but cost does not always equal value. In your cost of $300,600, does it include depreciation for being an over-improvement? That is a word that LO's do not like to see in a report, but call it what it is. Over-improved for the market. I think your marketing time of over 1 year helps support the lack of market appeal.

 

[Ray Miller]

I have put a value of $210,000 on the property.

Part of this comes from my own research of the past year at getting ready to build our own log home for retirement. Have a very large file on log homes in the area.

We decided that for our retrun on investment in this area was not a good choice for log homes. They cost a ton to build and are very hard to sell. So we are going with a ceder sided rustic ranch. Less cost, More retrun on the investment. It will be on the market in 10 years.

Thanks for you insight.

 

[Mike Garrett RAA]

Can you say......"complex appraisal assignment"?

Ever wonder why there are three approaches to value?

Sometimes, when there is no market data, one must hang his or her hat on the cost approach.

Who says you have to use only sales in YOUR market?

and, lastly, you can't make chicken soup out of chicken poop!

I just gave up on an assignment much like what you are talking about because it was toooooo complicated. This guy from out of state wanted to build a $500,000+ log home in a mountain subdivision on 2.5 acres that has a lot of mobile homes. In addition, there was a major forest fire (137,000 acres) in the vicinity and who knows what affect that is having on values.


Rather than say "over improvement" say "super adequacy" and dazzle them with your command of the language.