Return on investments

[Mark K]

I'd simply tell them that costs do not equal market value.

And tell them that these costs are typical homeowner expenses, not "investments".

I recently spent about $6,000 to put a new layer of asphalt over my 25 yr. old asphalt that was badly cracking. Investment? I don't think so.

 

[J Grant]

WRT post 10, My assignment is not to appraise their last sale value nor use it as a prior benchmark of MV .(or conclude if it sold, at, below, or above "market value")

I analyze it briefly and move on with appraisal. I don't want to get over involved in their last sale, if they over paid etc. I comment that the last sale sold in X date, the closed price was 75k over list price, sold at arms length terms. THE END. Let somebody else read between the lines and figure out if owner over paid back then . I can have my own ideas but avoid making a comment about it. .

If an owner is unhappy with my appraisal market value opinion, nothing I say is going to make them happy, least of all that they over paid back when purchased. The lender just wants an intelligent comment from appraiser on why cost does not equal value on the upgrades or maintenance items so they can say something to the agitated borrower and move on, because if the deal is dead the less time lender spends with it the better, if it moves forward then it does,

 

[glenn walker]

Rebuttal : Confuse & Conflate

To whom it may concern: The Subjects sales history indicates that in 2018 it was Listed for $900,000 and was purchased in 2018 for $975,000. I have received the owners list of repairs and improvements totaling $67,000. My final opinion of value is $1,000,000 or a $25,000 increase in value. The $1,000,000 is adequately supported by the sales comparison approach and based on using comparable sales in similar physical condition the buyers and market participant responses to separate improvements, which do include amenities or improvements like driveways, block walls, site utility, these are a function of the consideration of the property as a whole.

In Summary: The appraiser considers most of the costs spent as necessary in order for the owners to have a safe and habitable home. If they had NOT been completed the appraisers final opinion of market value would have been substantially lower, because he would have selected comparables that also featured out dated electrical services, walls that either needed replaced or rebuilt and homes that required new driveways. The interior paint is considered to be a personal preference and not an-improvement. The $25,000 positive return over the 2018 purchase price does confirm the $67,000 spent or invested has not-been fully recovered in the sales comparison approach. A cost approach was completed just to see what that produced but since the Subject property is 50-60-70 years old after adjusting for physical and some functional obsolescence, the cost approach resulted in lower value.

P.S. : Off the record the buyer paid $75,000 to $125,000 over market when he purchased this home because his Third Trophy Wife-Insisted She live in a Million Dollar Neighborhood-and Mr Big didn't have the guts to tell her he had to borrow the $67,000 on his credit cards. Now he needs a minimum value of $1,000,000 plus $67,000 to bail him-self out of this mess

 

[Tim The Enchanter]

I recently spent about $6,000 to put a new layer of asphalt over my 25 yr. old asphalt that was badly cracking.

Long driveway I guess. Hope so for that price.

Trophy Wife-Insisted She live in a Million Dollar Neighborhood

I don't know how much this means anymore. House around the corner from me sold for $880k recently. I checked out the open house. About 1700 SF with a pool, 3 carport, and 1 car garage conversion music room. The selling point was the double lot, about 16,000 SF. It was OK, but not super nice or anything. I was kind of shocked at the price. That's top end for Reseda. I wonder what that 7,000 SF house, biggest one in the hood by about 2,000 SF, is worth.

 

[Mark K]

Long driveway I guess. Hope so for that price.

225' long but widens out at the house, 2 car att and 2 car det parking area. About 4,000 sq.ft. $1.50/sf is about going rate here for 1.5 inch overly.

 

[glenn walker]

Long driveway I guess. Hope so for that price.



I don't know how much this means anymore. House around the corner from me sold for $880k recently. I checked out the open house. About 1700 SF with a pool, 3 carport, and 1 car garage conversion music room. The selling point was the double lot, about 16,000 SF. It was OK, but not super nice or anything. I was kind of shocked at the price. That's top end for Reseda. I wonder what that 7,000 SF house, biggest one in the hood by about 2,000 SF, is worth.

In the Valley that 16,000 Sq.Ft. lot is probably worth $550K to $600K by it self - the house is going to end up being torn down as soon as the Corona Virus ends, those planes will be landing at LAX again and Chinese with bags full of cash who always wanted a double size lot in LA : ) LOL

 

[Joe Flacco]

Those site size adjustments can be large.

I just did one with the data suggesting $300k-$400k adjustment comparing 50'x120' (6,000 SF) vs 50'x200' (10,000 SF) lots. The 6,000 SF site value approximately $900k-$1m.