Rents - Duplex Appraisal

[Judy Whitehead (Florida)]

Helllppp!! I'm doing a new construction duplex appraisal in our community where there is apparent new construction of duplexes going on but very few resales, as people are hanging on to them. I am having a Terrible time getting lease information from anybody. Either the real estate agents won't call back or the owners all hang up on me. (I'm trying not to take it personally!)

My biggest problem right now is that I have a perfect resale of a newer unit and it did not sell through a real estate company and the owner just hung up on me. Has anyone ever used ''estimated'' rent - based on what the comparable rentals are renting for if I disclose that is what it is - an estimate? Am I way out in left field over this? I have so few resales that I really, really, need to use this one. The estimated rent would probably be conservative and works out to be my lowest approach to value of all three. What say everybody?

 

[airphoto]

Correct me if I'm wrong (I'm sure someone will!) but,

Doesn't the 1025 SRIP report provide for reciting similar rentals to verify that the rent claimed for the subject is 'market rent?' Wouldn't we use the market rent if subject was vacant?
Isn't this the answer to your question?

(Not intended to sound like a smarty answer, either)

 

[Judy Whitehead (Florida)]

Yes, the SRIP does call for similar market rentals on a grid. This is where I was going to get my figure for the esimate of market rent for the comparable sale. It ends up lowering the GRM and provides the lowest approach to value. People that buy Duplexes don't want to share information with anyone and the real estate agents that close them don't want to be bothered with putting the information in MLS or getting out their old closed file.

 

[airphoto]

Perhaps you can find rentals in your newspaper? On-line and go back through old rental offerings?

 

[KD247]

I look for rental comps in the following order:

Recent appraisals (check the lenders who funded recent sales - maybe you know a staff appraiser).

Find the real estate agent who is the "duplex expert" in your area. They usually have enough rental information to finish the report.

MLS Info

Ask the tenants of the subject property if they are friends with other nearby tenants (they almost always are).

Call landlords (about 60% success rate - and usually the friendly ones will want to stay on the phone for about an hour!)

Knock on doors and ask tenants (about 80% success rate - some will be rude and some won't let you leave until they've found their copy of the lease just to verify everything).

Newspapers (last resort because these are asking prices only).



Once you've done all this, you probably have as much data as typical buyers and sellers use in their decisions. Buyers and sellers would not ignore a comparable sale just because they don't know the exact rents, so I don't see any problem with estimating them - as long as you indicate that they are estimated rents and don't strongly consider that sale in the income approach.

Every area is different. As long as you've been diligent in your attempts to gather data, your estimate of value should be as reliable as the next appraiser's.

 

[Judy Whitehead (Florida)]

Perhaps I should clarify this a little - since I am in the middle of two duplex appraisals, I just assumed everyone else was wrapped up in the SRIP form like I was!

On the grid where the Comparable Sales are - not comparable rents, it asks what the units rent (or rented) for. THAT is where I cannot get the information. I was able to find a real estate agent that handles the rental of a bunch of duplexes and was able to get Comparable Rentals. It is the Comparable Sales Rental data that I was going to estimate. You must have the Comparable Rents (or an estimate)on that grid in order to compute the Gross Rent Multiplier, thereby giving an estimated of value based on income. This is so frustrating! I'm tired of getting hung up on and I went back out to the duplexes and no one would come to the door. I don't look that bad, either for a grandmother!

 

[Mountain Man]

They don't like to give out their income info, because a lot of it is in cash (non-reported). 8)

Mell.

 

[airphoto]

Judy,

Your final choice, then is an entry such as: $400.00 (e).

Remark in your write-up that actual rental data for these sales was not available, that no tenant would speak with you, that the owners were rude and unco-operative, the realtors either unco-operative or ignorant and that you had to estimate these rents based on your expertise and knowledge of typical rents in the area. You've done your best, disclosed .. and moved on ..

 

[Judy Whitehead (Florida)]

I guess that is what I was considering all along. I have good data for estimate of market rent so I guess I'll just use that. If the underwriter doesn't like it, I guess they can just lump it. Since I believe I'll be estimating on the low side anyway, so be it. The market for duplexes is real good right now. I guess the investors are staying away from the stock market.

 

[Jeff Horton]

This may not help you much but I have found that when I really need a realtors information that my best bet is to show up in person to the office and talk the lady (or man) at the front desk. Even if the Realtor is not there I have had pretty good luck getting access to the file. Of course I am in a small town and thats a plus!

If the receptionist is clueless and just sits there I then ask if there is someone else that could help me. If your lucky you will get someone that is helpful but not really that interested and will pull the file and just let you look at it. Just be sure to stress how improtant this information is to you. Has worked for me several times.