Subject proprty has full tennis court, how to approach adjsutment?

[hastalavista]

The subjects sits on two typical size residential lots, twice the size of most homes in the area, the tennis court is on the second lot, any help on how one would adjust for this, not like I can extract a adjustment from paired sales. Would appreciate any thoughts on how to approach adjusting for the tennis court and should the CA reflect functional depreciation?

(My bold)

I missed the most important part of your post (no coffee yet; I'll fix that now!).

The second lot may have its own H&BU as a residential lot; so that value could be more than the contributory value of the tennis court amenity to the subject.

 

[Lee Lansford]

Posts #7 and #11 may be more key to the valuation of the subject than anything specific to the tennis court.

 

[Michigan CG]

If it were me, and there are no other tennis court sales (or listings) in area, I would give it no adjustment......

Just because there is no market evidence in terms of sales does not mean it has no value. Appraisers cannot state since there are no sales there is no market value. Not acceptable appraisal practice.

I would be inclined to make a cost related adjustment. Find the cost of the court, apply the dwelling age vs say a 20 year life (suspect it to have a shorter life than the dwelling... then apply a discount as an over-improvement... perhaps using the same % discount that I might apply to a pool or fancy entry gate...

This is one way to do it although I don't think it provides market reaction to the improvement.

We know that cement costs about $5-$7/SF. But before we pour cement we must have a very level lot so there is a few thousand dollars. I am guessing a tennis court is about 50 x 100 (pure guestimate). So cement is lets say $7/SF because it is most likely some special cement and you have to add green food coloring to it to make it green.

Then you need your net and a footing for the poles....let's add another $1,000.

A tennis court is not really a tennis court without a fence so we have our hypothetical 300 LF of tall chain link at $20/LF. This is $6,000. Throw in a couple gates and make it $6,500.

$6,500 Fence
$2,000 Site work
$7,000 cement
$1,000 net/poles/footing.

Our total is $16,500 and lets add 20% for contingencies which is $3,300 for a total of $19,800 rounded to $20,000 (remembering I am guestimating some of these numbers.)

So the contributory value of the tennis court is most likely not more than the cost to build it, although it is possible.

......it takes up valuable land that can be used for a guest house or garden or other uses. How many people play tennis, and do they need their very own court?......

In my subdivision in the back there is an exclusive area where the houses are 4,000-7,000 SF. Two of the homes have tennis courts (of course neither has sold). Most of the lots are decent size and not one home out of the 25 or so has a guest house and I doubt anyone has a garden, most have inground pools.

This would tell me there is more demand for tennis courts than guest houses which have to be maintained and I would rather appraise a property with a tennis court than a guest house any day of the week.

"two typical size residential lots, twice the size of most homes in the area, the tennis court is on the second lot,"


two separate lots ?? Were they merged into a Single Lot?

.......

I think what Mike is getting at is Highest and Best Use. If there are two lots could the Highest and Best Use of the second lot for additional single-family improvements.

In my area new construction is not financially feasible and I will assume that is the case with the OP. But Hand B must be considered FIRST before we value the tennis court and its contributory value (or lack thereof).

.....res appraisers are supposed to extract the market accpetance of an improvement, not how much it cost!.....

Actually appraisers are supposed to measure market REACTION. Knowing how much something costs is part of due diligence in the appraisal process IMHO. And if we do discover that there is no contributory value, or little market reaction I would think it would be prudent to show the reader of the report that you in fact know the cost new of such an improvement.

......Again, it is what the "typical buyer " would pay. If nobody in the area is buildign tennis courts, it is because typical people in the area dont' want them.......

(BTW J I am not picking on you, just putting my two cents in). Let us define typical buyer. Tennis court properties tend to be in very upscale neighborhoods and thus the typical buyer of these homes is very limited. In the back of my neighborhood I would guess the typical buyer of these homes is less than 1% of of the overall population.

Just because something is not typical does not mean it does not have value. Rolls Royces aren't typical in my area but that doesn't mean they don't have value. People may want a Rolls Royce or a tennis court, they just may not be able to afford them.

........That, and no sales or listings with courts would lead me to talk about the tennis court, but make no adjustment for it.

What if you have a property with horse stables and there are no sales or listings? Does that mean the $100,000 horse stables have no value?

.....A survey of brokers (market participants) can be very helpful in providing market support for an adjustment or no adjustment in such atypical cases.
Since a tennis court is a recreational amenity, based on the market participants' feedback, it may be a similar amenity (and adjustment) to a pool......

This is how I would approach the problem and I would explain in my report the various opinions of the brokers in addition to the above knowledge of what it costs for such an amenity.

 

[J Grant]

Rolls Royces aren't typical in my area but that doesn't mean they don't have value. People may want a Rolls Royce or a tennis court, they just may not be able to afford them

Well that is the crux of the problem. Rolls Royces have value, but if you are let's say theoretically trying to sell a RR in an area where people can't afford it, it has no value in that area. In fact, in a working class area, for example, owning a RR is a negative, high gas and insurance costs, it might get broken into etc. But yes, in the approrpiate upscale market , Rolly Royces have value.

You don't have to lecture me about how finding out a cost of an amenity is proper appraisal procedure. That is very condescending. I never said don't take into accout the cost, I said, what is important, in residential appraising, is to find out the market reaction to amenity, which may or may not reflect the cost.

Because someone paid 20 k to put in a tennis court, for example, is it commanding 40k as an adjustment at resale of the home two years later? Prove it.
Maybe it is commanding 50k, because paired sales show that people are paying 50 k in reslae market. OR, zoning has changed and no courts allowed to be built from now on, so any homes with courts are now in demand because no more can be built in the ara..

Or, maybe the court commands a 10k in adjustment, because paired sales show that is what similar homes with courts sell for.

Or maybe the court commands no adjustment, because there are two listings on the market with tennis courts unsold for 400 days and per realtors, none of their buyers want tennis courts and in fact are asking them not to show properties with tennis courts, or their last deal fell apart because the buyer wanted the tennis court removed and the seller refused to pay for it. Or paired sales show no premium paid for tennis courts.

I agree, tennis courts are usually in upscale areas. The poster does not mention anything about the area, only that it is a double lot or two lots. If it is in an upscale area and there are no sales with tennis courts, I'd have to wonder why. Or, maybe it is a home with two lots in a lower price area and the court is an over improvement. I don't have enough information on that, none of us do based on skimpy info on post ( let alne the two lot problem)

Usualy when I have done subjects with tennis courts I am able to find at least one or two sales within a year in subject subdivision or nearby comepting area alnd with paired sales derive an adjustment, if any from the sales with tennis courts.

The poster is saying they've found no sales, which leads me to question whether it has value in the subject market area ( I didn ts say it has no value, I said the poster needs to question whether it has value to resale buyers, apart from what it cost).

 

[J Grant]

In my subdivision in the back there is an exclusive area where the houses are 4,000-7,000 SF. Two of the homes have tennis courts (of course neither has sold). Most of the lots are decent size and not one home out of the 25 or so has a guest house and I doubt anyone has a garden, most have inground pools.

I'd want to ask the realtors why the homes with tennis courts haven't sold, and also would look at the marketing times vs homes without courts. It sounds like in that area, guest houses are not valued as an amenity. In my area of Florida in upscale communities, guest houses command value due to relatives visiting, use as home office or hobby , in laws living in or caretakers live there if an estate etc. Every area is different though.

 

[Janeice Stone]

1. Is this in a typical development or city type development?
2. Does the tennis court lot have a separate tax id and legal description?
3. If it has a separate tax id and separate legal description then there may be a problem combining the tennis court lot with the house lot for valuation purposes. If the tennis court lot has its own legal and tax id, it also can be sold separate from the other lot unless encumbered by a mortgage. In my area if it is within the city limits, they would require rezoning and replatting in order to change this scenerio. ( been there )
4. If it shares the legal description then it would be excess land and an over improvement. Sometimes, some amenities may not have a market value but only value to the person that built it.