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Question - Which Form To Use?

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Merlin Peabody

Freshman Member
Joined
Jul 19, 2003
I have determined that the subject property, with an older single family residence is more valuable to a redeveloper who would demolish the existing dwelling and build new. Comparables I intend to utilize are the same,... most now have a new house on the lot.

My question is which form to use?? I am leaning toward using a vacant land form rather than the URAR. In either case a lengthy narrative will accompany. Are comparable photos really necessary? This appraisal is for an estate.

Thanks in advance for your help.

M.P.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
IMHO, there is often two markets in these areas (at least in my market) - the market for the home to be restored and lived in, and the market for tear-downs. Such properties can and do exist side-by-side. Admittedly, there is not a lot of value differential between a tear-down and an owner-occupied property as generally 80% or more of the value for an existing home in these areas is in the land.

That being said, IF, and I emphasize IF, this dual market exists, it is going to depend on the nature of the order to the appraiser. If this is for a refinance or purchase as an owner-occupant residence, it's a SFR with land sales and a lot of addenda to support your decisions.

However, if this duality doesn't exist, or the purpose is for redevelopment, then it's a land appraisal with cost to demolish on a line item.

This can definitely be a complex appraisal. You should check and see if the area has been restricted to the size of replacement homes, restrictions on tear-downs, etc.

Good luck.

Roger
 

Merlin Peabody

Freshman Member
Joined
Jul 19, 2003
There is indeed a dual market in this case. In fact, the house has the potential for being significantly remodeled and expanded, with attic finish & a room addition. So IMO, a third potential market exists for a remodeling contractor to turn a profit on this profit as well as a re-developer. It is just so out dated, disfunctional and lacking much architectural character, that I figured the redeveloper would pay more, as his costs would be less.

Saw this one coming down the pipe and knew it was a doozie. Some of the new houses built nearby are trapezoids, so the zoning standards appear pretty liberal. Or the developers are very creative, or both.

Roger - Thanks for the quick reply.
 

Patrick Egger

Sophomore Member
Joined
May 29, 2003
Professional Status
Certified General Appraiser
State
Nevada
Merlin ...

First you need to establish that the land (less the cost to remove the existing improvements) as if vacant, has more value than the as is value of the existing improvements. If the house is in such poor condition that it's marketability is limited, but there's a good market for land, you may have a point.

Look at the value of the land as if vacant ... the value of the land and house as is ... and the value of the land and house as if refurbished, less the cost to refurbish and profit. Which ever is the highest will determine which direction to go.

Don't be too surprized if they are so close, that its a toss up ... keep in mind that you need good market evidence & support for any direction you go. Do these types are great experience, but take a lot of time.

Patrick
 

Rich Hahn

Senior Member
Joined
May 2, 2003
Professional Status
General Public
State
Colorado
single family, REL undeterminable.
HBU, present use?
Client may poo poo the land appraisal.
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
You may not want to do it but if it is for an estate just do a narrative. Then you appraisal won't end up in a mortgage lenders file. Then you free to do it right. Not be limited by a form.

I have one now that needs to be a narrative desperately but it for a mortgage so I have to try to make if fit the stupid form. And it is not going to fit very nicely!
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Rapidly becoming a "complex appraisal"...proceed with caution. Unless you are very sure the highest and best use is "as if the site was vacant"...I would do it on a URAR and use the sales of other properties that were sold as single family residential and then torn down.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I'd do it like "the old guy". Compare tear down comps to tear down comps. Now the UW may not like seeing the remaining ecomonic life as 6 months, but that's not my problem. B)
 
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