Sells Of Comparable Homes

[Keith Sutyak]

I know it seems strange, but the structural engineer and I agreed that the property would best fit in with the other two story homes by going up over the larger end of the house. As you know, ranch homes typically occupy a larger space than two story homes. We believe the difference would hardly be noticable.

I would not be honest if I said that I was not overbuilding. But then, I do not expect an equivalent appraisal for a home of equal size in another neighborhood. The functionality of the home is what I need (i.e., more bedrooms). But, there are so many other selling points that would be considered attractive. Location is prime - we live in the heart of Virginia Beach and can get to the three Navy bases (areas largest employer) in a matter of 20-30 minutes. The area is in a flood free zone, and because we have underground lines, we were among the 5% that did not loose power during Hurricane Isabel. By the way, I am resheathing, residing and reroofing the house and installing all new windows. In effect, it is a new house. The only difference is that the engineer and I designed it to be significantly stronger than the new homes around here. Plus we are adding most of the upgrades which are charged over and above the prices that I gave.

 

[Bill_FL]

Keith,

Because I am not familiar with your market area, I can not answer whether or not this is the right thing to do economically. It sounds like you know you will be getting into a situation that you understand you will be over building.

You also must remember, that there are many types of value, there is what you are asking for, market value, but there are many types of value, investment value, insurable value, tax value, and the one that sounds important to you, value in use.

I think this is a situation where you are going to have to crunch numbers, hire a very competent appraiser to appraise the proposed improvements, then make a decision based on that information.

Good luck, this sounds like one of those projects on that HGTV show, Before and After (I think that it was it is called). Heck, give them a call, maybe they would like to get in on it too!

 

[Lee Lansford]

To the heart of the matter:

What you are proposing constitutes a complex appraisal assignment and there are no quick and easy answers short of having a competent appraiser (such are in short supply these days) conduct an appraisal.

The appraiser will have to consider many factors including, but not limited to, the functional utility of the expanded improvements. "Comps" may come from a wide geographic area and may require going back in time a long period.

Your revised dwelling may, or may not, constitute an over-improvement. No one can tell you what it may be from where we sit.

An appraiser will also have to determine whether or not there are other sold properties will attributes similar (well, as similar as possible) to your proposed expansion. The question the appraiser will want to answer is how did this expanded dwelling fair in the market? Did the market consider it to be an over-improvement or not?

The "new" house may be larger than other new, or newer, houses, in your neighborhood or other nearby competing neighborhoods, but that does not at all mean that such housing will not have a market value higher than yours! Such housing may have superior market appeal (houses designed to be the size, or GLA, that they are vs. a house that has been expanded) and utility. I can not know for certain...there is just that possibility!

I can but offer a general observation: Time and time again in instances where a comparatively small house--in a neighborhood of compatible housing--has been significantly expanded in a professional manner, seldom does such a house have a resulting sales price equal to a very recently constructed house of similar quality and similar size. There can certainly be exceptions to this observation. But...I can't tell you the position that your expanded dwelling will have in its market from my seat here in front of my computer.

If you plan on living in the house for a l-o-n-g time, "time" has a way of curing many mistakes.

You are also likely aware that it costs more on a cost per square foot basis to add a significant addition to an already existing dwelling than it would cost to design and build the same improvements from scratch.

Good luck.

 

[vargasteve]

I agree with Lee it does sound like a complex assignment.

There are several issues going on here.

1st when you ask how one selects comparables (especially for a complex assignment) based on availability of 'similar comparables' the approach will be tailored for the time period. So the actual answer to your question might be different in December & January, then in November - just based on the inherent circumstances in which is available for the appraiser to select from. Its kinda a moving target, and you get what you get (at that particular time). Going outside the subdivision is always a less than desirable choice but often done when the comparables are sparce inside the ideal market pocket/location.

I don't know your area, (you imply that there aren't such homes in your location), but it does sound like you 'may' be building a home that works for you but could be an over improvement for your area. If so, it may seem to work for you but may not impress the market & cause the same reaction with the typical buyer. In my area 5 & 6 bedroom homes (which at one time were the 'wow of its day') have less than ideal marketability often since families are much smaller in todays market.

A good addition / expansion of your home should return to you a value that exceeds your $110K investment. If not then its not currently supported by the market.

 

[Blue1]

I need to add a second floor, making the house 3100 sq ft

Areas in my immediate neighborhood are typically two story, 2400 sq ft four BR homes

This raises the proverbial 'red flag' in my mind. With 3100 sq.ft. of living area you would be more than 25% larger than the typical homes in your area constituting what could be described as an 'overimprovement.' An appraiser using 2400 sq. ft. sales (in your immediate area) would have significant GLA (Gross Living Area) adjustments which would raise another 'red flag' at the underwriter. Conversely, going outside the neighborhood to find similar sized homes would also raise a 'red flag.'

If it were me, I'd try to make my home as compatible and conforming to the other homes in the area as I could and thereby precluding any future problems or 'complex' appraisal assignments to procure RE loans now and in the future.

Just my opinion.......Good Luck

 

[Keith Sutyak]

I appreciate your opinion, but more so your wisdom. Thank you. Unfortunately, the lower floor footprint is what drives the square footage. The design is based upon a single story two car garage on the left side, and a two story segment over the middle and right side. This makes the home the most compatable, architecturally, with the other four two story homes on my court.