Superadequacy?

[Appraisal1]

Good old zillo. Found a few sold props with larger GLA within 40 miles.

 

[c w d]

Steve, different markets may be apples to your market which may be an orange. In those cases it could be that the different markets from which you're searching for comparables are not comparable to your market. But, you could measure the market reaction to 8000sqft+ homes in those other markets as compared to smaller homes. You could then apply that measured reaction in the comparison of homes in your subject's market. The idea is that a segment of buyers for 5000sqft- homes aren't in the market for 8000sqft+ homes and that the reaction between two would be applicable to just about any market in your area. But, you'll want to measure that reaction from separate subdivisions with 5000sqft homes and 8000sqft homes yet still in the same area. If they're intermixed in the same subdivision then the smaller homes will attribute some of their value from the effect of desirability of such a subdivision, unless your subject is in a similar subdivision with other 8000sqft monsters that just haven't sold in a while.

Or if there is some feature, like a river for example, that may illicit similar reactions from the market in their respective areas you could expand your search to include a broader area or another river entirely. It's not on Lake Tohopekaliga is it? Try different lake areas. It appears there are a number of large lakes in your area.

In any case, you're going to want to call your client back and tell them you're not going to make the deadline. Unless my client was willing to pay me for the potential of missed work for an entire week I would have required more time. Because an assignment like that would require a whole week 8 hours a day for me. I hope your fee is four figures. If it's three figures don't reply. You'll just p1s off everyone here.

 

[Mztk1]

Celebration has a couple of sales at 7,000sf. Are you on the Osceola side of Kissimmee? Lake Wales has an 8,000sf sale on 5 acres that is under $1M and can set the lower end of property value. There is a 7,777sf listing that expired in March at 2291 Gunn Rd in Kissimmee.

 

[Appraisal1]

Sorry I fell asleep. My subject is not on any lake and yes, I was paid more than $1,000. It is on the Osceola side of Kissimmee. Thanks to all who replied, you were all truly helpful. The advice and information given is appreciated. Now...I will continue on the road to reconciliation, wherever that will lead...8 more hours...no sweat!!!!.

 

[Deleted member 77547]

Steve,

To answer your previous question, big "oddball" properties are complex because:

1) There are often no other comps within its neighborhood.

2) It is difficult to identify its market. If there is no market for the "mansion" within its neighborhood, then one runs into highest and best use issues. Is the highest and best use as a mansion or would it be to tear it down and subdivide? Perhaps it is an interim use until the market turns around.

3) In the Sales Comparison approach one must consider the locational differences between the subject and comps.

4) Market conditions are not the same with a "mansion" as they are with mainstream homes (for lack of better term.) They generally don't appreciate as quickly and in a down market may depreciate at a greater rate due to the smaller number of qualified purchasers who are willing to live in a market that may not support it.

5) The contributory value of atypical featuers (e.g., tennis courts, etc.) needs to be developed through sales of homes in other markets that have those features.

6) As was previously discussed one must go as far out and as far back as it takes in order to bracket GLA, atypical features, etc. It typically takes more than 3 or 4 comps and some listings in order to develop a credible report.

Good luck!

 

[Appraisal1]

Superadequacy/Highest & Best Use/Market Area Definition

Anyway, I finished the appraisal using 4 comps, one was larger in GLA than the 8500 sf behemoth, and 15 miles away in Orlando. The smaller 3 were 5 miles or less in Kissimmee. Anyway, the lender just kicked it back with these conditions....
1.Appraiser to comment: the lender has identified that the subject property is located in an area where the appraisal values are declining. Was this decline taken into consideration when the final appraisal value was reached? If not, then adjust using time adjustments.
2.Indicate that subject GLA is common and typical for the area.
3.Indicate if the subject is an overimprovement for the area.
4.Provide one listing and one recently closed comp with similar site and GLA to support the value.
5.Legal description indicates subject has 2 parcels; were both parcels used in determining value and do they both have improvements on them?
I noted in the report that I had to go out of the immediate area to find higher GLA. So does this constitute an overimprovement for the area? Wouldn't the market be different for the larger homes than in the overall market area? Wouldn't the subject obviously not be common and typical for any area? So, I went out 15 miles to bracket the subject to show that there is a market for large GLA and it is not a superadequacy issue, but the lender wants more clarification. The two parcels are subdivideable and one doesn't have any improvements on it. Of course, the value was based on that, I believe I did a fine job justifying the land value...I just didn't note the two parcels...I appraised it as one parcel, believing that highest and best use is 1 SFR, and that subdivision, maybe getting $100 K for the land would devalue the property by at least that much. Anyway, there is a discrepancy between the 2.2 acres of excess land shown by the county appraiser and the 1 acre of excess land shown by the survey done 6 years ago. The survey company verified the discrepancy. The land is zoned ORS1 Open Space Residential (One Unit per 40,000 sq ft). What do you suggest?

 

[Appraisal1]

Sorry, I reposted the last comment starting a new thread and would appreciate any help in that thread. I'm not sure how to stop a thread, or if it is possible. Anyway since the appraisal finished and there were new issues I thought that a new thread would be appropriate...maybe not. The thread is titled: Superadequacy/Highest & Best Use/Market Area Definition.......Thanks.

 

[Deleted member 77547]

Anyway, I finished the appraisal using 4 comps, one was larger in GLA than the 8500 sf behemoth, and 15 miles away in Orlando. The smaller 3 were 5 miles or less in Kissimmee. Anyway, the lender just kicked it back with these conditions....
1.Appraiser to comment: the lender has identified that the subject property is located in an area where the appraisal values are declining. Was this decline taken into consideration when the final appraisal value was reached? If not, then adjust using time adjustments.

How old were the comps and is it a declining area? If so, time adjustments should have been made.

2.Indicate that subject GLA is common and typical for the area.

Is the GLA typical for its neighborhood? Are there other homes that have similar GLA but haven't sold or are you dealing with the biggest home in the area? This question should've already been answered prior to the report being turned in....likely in the "does the property conform to the neighborhood section"

3.Indicate if the subject is an overimprovement for the area.

See answer to No. 2 above. If it is not an overimprovement, then it should've been mentioned that the home is at the upper end of the value range due to its larger lot size and GLA, but is not an overimprovement. You can only state this if there are other homes like it nearby, even though they may not have sold. Otherwise....it may be an overimprovement.

4.Provide one listing and one recently closed comp with similar site and GLA to support the value.

One should always provide listings in these cases (my opinion.) It helps the lender understand that there are other homes like it and what those are currently going for...especially in a declining market. If there are no recent sales/pendngs/listings that will bracket the site and GLA then this is where one goes as far out and as far back as they need to, but it needs to be thoroughly explained that there were no recent comps closer so the appraiser had to go outside the area for appropriate comparables. Ex: "Comp 1 is the closest, most recent sale of a home with similar GLA and lot size." It is noted that this sale is dated, therefore a time adjustment was warranted to reflect current market values." you get the idea.

5.Legal description indicates subject has 2 parcels; were both parcels used in determining value and do they both have improvements on them?

This should have been clearly stated in the report

I noted in the report that I had to go out of the immediate area to find higher GLA. So does this constitute an overimprovement for the area?
Wouldn't the market be different for the larger homes than in the overall market area?

Maybe, does the market where the subject is located support a "trophy" home?

Wouldn't the subject obviously not be common and typical for any area? So, I went out 15 miles to bracket the subject to show that there is a market for large GLA and it is not a superadequacy issue, but the lender wants more clarification.

The two parcels are subdivideable and one doesn't have any improvements on it.
Could this be subdivided and sold separately from where the improvements current set? If so, could it be built upon?

Of course, the value was based on that, I believe I did a fine job justifying the land value...I just didn't note the two parcels...I appraised it as one parcel, believing that highest and best use is 1 SFR, and that subdivision, maybe getting $100 K for the land would devalue the property by at least that much.

The two parcels should have been noted in the report - even though you appraised it as one large lot. Could the 2nd parcel that does not contain improvements be sold off and developed? Then what's the HABU then? Current use? Interim Use? or to split of the parcel and build something the market would support?

Also regarding your "of course it was based on that" comment: What's obvious to one is generally not obvious to others. The fact that you didn't note the two parcels and they discovered may put the credibility of your report in question. It may have been more appropriate for the two parcels to have been mentioned, but then explain that you treated it as one parcel. This way everyone is on the same page.

Anyway, there is a discrepancy between the 2.2 acres of excess land shown by the county appraiser and the 1 acre of excess land shown by the survey done 6 years ago. The survey company verified the discrepancy. The land is zoned ORS1 Open Space Residential (One Unit per 40,000 sq ft). What do you suggest?

Finally, there are too many variables to be able to answer your questions directly. My responses here were general and meant to give you more guideance than exact answers to your questions. Hope this helps.