Tennis Court Adjustment Help Please

[CaliforniaSD]

Hello,
I am appraising a non-arms length transaction among friends for a reputable lender. The custom built home sits on a little over an acre and has a little over 3,500 GLA. It is in a solid C4 condition. There is only one comp that I found in the market area that has a tennis court and it is in superior condition with superior amenities and it closed over six months ago (large market adjustment would be required), it is impossible to use paired sales to extract the true market value of this tennis court, due to the superiority of the comparable.

The average life expectancy of a tennis court is 25+ years if well maintained. This court was built in 2001 and is in rough shape (cracking in some places, water damage, peeling, etc). I tried attaching a picture, hopefully it worked. I'm not a tennis player but maybe someone here can give me some insight. If the tennis court is 21 years old, then 4/25=.16, the average cost to construct a tennis court in this market with fence and lights is approximately 100,000+. So, .16X$1,000,000 is $16,000. I don't know enough about tennis courts and was hoping to get some input from you guys. Do you think $16,000 is an appropriate adjustment? I don't think this tennis court was well maintained and honestly I think it would be a financial burden, as opposed to a value adding amenity. This method does not take into consideration market demand for the tennis court. On a scale of 1-10, I believe market demand in this area is a 1 at best. Would taking 10% of $16,000 = $1,600 be an appropriate method of adjustment? Should I still use the superior comp with the superior tennis court and explain that extracting the value for the tennis court is not possible and that I used this method? Does anyone have a better idea. I really don't like tennis, hopefully someone here does and can provide me with some directive. Thank you if you've gotten this far, I really appreciate you taking the time to read this and possibly respond.

 

[CaliforniaSD]

Hello,
I am appraising a non-arms length transaction among friends for a reputable lender. The custom built home sits on a little over an acre and has a little over 3,500 GLA. It is in a solid C4 condition. There is only one comp that I found in the market area that has a tennis court and it is in superior condition with superior amenities and it closed over six months ago (large market adjustment would be required), it is impossible to use paired sales to extract the true market value of this tennis court, due to the superiority of the comparable.

The average life expectancy of a tennis court is 25+ years if well maintained. This court was built in 2001 and is in rough shape (cracking in some places, water damage, peeling, etc). I tried attaching a picture, hopefully it worked. I'm not a tennis player but maybe someone here can give me some insight. If the tennis court is 21 years old, then 4/25=.16, the average cost to construct a tennis court in this market with fence and lights is approximately 100,000+. So, .16X$1,000,000 is $16,000. I don't know enough about tennis courts and was hoping to get some input from you guys. Do you think $16,000 is an appropriate adjustment? I don't think this tennis court was well maintained and honestly I think it would be a financial burden, as opposed to a value adding amenity. This method does not take into consideration market demand for the tennis court. On a scale of 1-10, I believe market demand in this area is a 1 at best. Would taking 10% of $16,000 = $1,600 be an appropriate method of adjustment? Should I still use the superior comp with the superior tennis court and explain that extracting the value for the tennis court is not possible and that I used this method? Does anyone have a better idea. I really don't like tennis, hopefully someone here does and can provide me with some directive. Thank you if you've gotten this far, I really appreciate you taking the time to read this and possibly respond.

I meant .16X $100,000 not 1,000,000, sorry.

 

[Steelers74]

I've found around here depending on the neighborhood, some homes have a tennis court or basketball court in the back yard and I have found the market here treats them pretty much like a patio. If its just a slab of concrete or asphalt, that's pretty much just what it is. Not everyone will use it for tennis or basketball but as just another patio.

 

[Terrel L. Shields]

Cost related adjustment sounds like near end of life. Cost? Hmm - here it would cost $30k or so and home advisor says the average court is 60k. but 100k is not out of reason.
Take the sale you have and extract the court contributory value
Sale Price - land value (as if vacant) - depreciated cost new of dwelling, the remainder is the site improvements...could be substantial and include driveway, landscaping, etc. But allocate as best possible. Then go into the addendum and explain the two processes and the difference. Reconcile and opine a number.

 

[George Hatch]

No way would I bother with a cost-derived adjustment. You can't even develop a reasonable depreciation factor without going back to the sales data. IRL the contributory of a new amenity to the whole is different in some markets and price ranges than in others. So even a new unit can suffer depreciation (albeit not physical) right from the outset.

This is an SFR: go back to what the buyers and sellers in the market actually do with this amentity. You don't have any great comparables in your current dataset. However, that doesn't mean you can't find paired sales with/without in other neighborhoods and/or which sold during other time frames. They won't be suitable for presenting as direct comparables in your current analysis but they can be used to develop the adjustment factor that you can import for application to the direct comps you're using in your sales comparison.

You're not looking for comps, you're looking for the adjustment factor to apply to your comps. Not just with this situation but with any situation involving an atypical property attribute, like excess land or solar or a well or septic vs sewer or ADU or whatever.

 

[Ariba]

Hello,
I am appraising a non-arms length transaction among friends for a reputable lender. The custom built home sits on a little over an acre and has a little over 3,500 GLA. It is in a solid C4 condition. There is only one comp that I found in the market area that has a tennis court and it is in superior condition with superior amenities and it closed over six months ago (large market adjustment would be required), it is impossible to use paired sales to extract the true market value of this tennis court, due to the superiority of the comparable.

Tennis courts are our and Pickle Ball courts are in and the future. Probably more value as a basketball court.

Sideline how many appraisers play tennis? I venture to say 0%.

This court was built in 2001 and is in rough shape (cracking in some places, water damage, peeling, etc). I tried attaching a picture, hopefully it worked.

$0

 

[KYLECODY]

Just work on appraising the home and land..find similar comps. The court is just one little part of the property and not worth getting hung up on. No need to "bracket" something like that. Its an old slab of concrete with lines drawn on it. Would a typical buyer pay more or less for the home based on it? A tennis player might pay a bit, non tennis players wouldn't and many would rather have dirt, rock, grass, whatever in that space, so no contributory value. In California price ranges I doubt adding x amount or 0 would change your opinion of value on the subject? In my market Ive never seen a measurable market reaction to older sports court or tennis court. On those custom homes on acre lots I have noticed a measurable difference between fully, nicely landscaped versus no backyard other than dirt but wouldn't try and extract on a tennis court. Just state there is no measurable market reaction to the tennis court and that is was considered in the final reconciliation.

 

[CaliforniaSD]

Cost related adjustment sounds like near end of life. Cost? Hmm - here it would cost $30k or so and home advisor says the average court is 60k. but 100k is not out of reason.
Take the sale you have and extract the court contributory value
Sale Price - land value (as if vacant) - depreciated cost new of dwelling, the remainder is the site improvements...could be substantial and include driveway, landscaping, etc. But allocate as best possible. Then go into the addendum and explain the two processes and the difference. Reconcile and opine a number.

Home advisor is a joke. I called three companies that specialize in post tension concrete tennis courts with fence and lights, the average is $100,000. I cannot ‘allocate as best as possible’, there is no way this can be extracted from a comp with 250,000 market adjustment and 50% over my GLA. I decided to give it 0 value because it is in ruins and the cost to cure is extremely high. This thing is an eye sore.

 

[CaliforniaSD]

Tennis courts are our and Pickle Ball courts are in and the future. Probably more value as a basketball court.

Sideline how many appraisers play tennis? I venture to say 0%.

$0

$0 it is, this thing is an eye sore and in ruins. Thanks!

 

[CaliforniaSD]

Just work on appraising the home and land..find similar comps. The court is just one little part of the property and not worth getting hung up on. No need to "bracket" something like that. Its an old slab of concrete with lines drawn on it. Would a typical buyer pay more or less for the home based on it? A tennis player might pay a bit, non tennis players wouldn't and many would rather have dirt, rock, grass, whatever in that space, so no contributory value. In California price ranges I doubt adding x amount or 0 would change your opinion of value on the subject? In my market Ive never seen a measurable market reaction to older sports court or tennis court. On those custom homes on acre lots I have noticed a measurable difference between fully, nicely landscaped versus no backyard other than dirt but wouldn't try and extract on a tennis court. Just state there is no measurable market reaction to the tennis court and that is was considered in the final reconciliation.

No contributory value it is, thanks! I can’t images anyone wanting to own a tennis court that is in ruins, even a tennis player probably wouldn’t want to play on this thing. It is an eye sore and the cost to cure is extremely high.