• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Tri-plex too cheap?

Status
Not open for further replies.

Ken Youngkrantz

Thread Starter
Junior Member
Joined
Dec 2, 2003
Professional Status
Licensed Appraiser
State
California
I am working on a tri-plex sale. 1st problem; a lack of sales, I am going to have to use two four-plex sales. Think I have a handle on this.

2nd problem the sales price of the subject. My comps appear to be supporting a value of around $430,000. I looked at some four-plexes I did last year and comparing the four-plexes price per unit with the tri-plex I am appraiseing it appears the $443,000 for the subject appears reasonable when you look at price per unit.
GRM is looking like $460,000.

The active listings would support a value in the high $400's.

The subject is selling for $320,000. The subject is in as good or better condition than any comparables I have. The subject is in as good or better location than any comparables I have.

The seller of the subject is a 78 year old lady. Her CPA told her she needs to start selling some of her units, per the listing agent. She owns 300 units in town. Buyer is from out of town (Southern California).

The agent who is handling this sale also has the property next door (owned by the same lady) as a pending sale at $320,000. The properties do not have signs in the front, they are in the MLS. The lady has owned both of these units since they were new (they are 29 yrs old).

If I appraise the property for around $430,000 with a sale price of $320,000 is this going to raise all kinds of red flags?

I'm I missing something? What questions I should be asking?
 

Lee in L.A.

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Isn't Bakersfield in a declining market now? :Eyecrazy:
I know lots of my areas are. Some of them big time. :shrug:
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
If I appraise the property for around $430,000 with a sale price of $320,000 is this going to raise all kinds of red flags?



And just why should you care if red flags go up? Is your assignment based on making sure the old lady is getting the most dollars out of her units or to make sure that the closing goes well?

Come on. Read your own certifications. They say essentially that you are an independent appraiser with no interest in the property or bias to any party in the transaction. If this is true, why should you care if it raises any questions, red flags or kills the deal?

Prove your independence by ignoring such things that are none of your business nor part of the assignment, all the while concentrating your efforts on developing an honest, credible opinion of value.
 
Joined
Nov 7, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Isn't Bakersfield in a declining market now? :Eyecrazy:
I know lots of my areas are. Some of them big time. :shrug:

Along this line, how long were these units on the market for? What the seller sells for is not of our professional concern, however, I have been personally concerned when I have seen unknowledgeable sellers (typically older) being under priced by the listing agent and contracting in 10 days - but that is none of our professional responsibility. The UW will see that the buyer just got a deal.
 

Wendy

Senior Member
Joined
Feb 23, 2004
Professional Status
Certified Residential Appraiser
State
Florida
My market is a long way from yours, but here is some food for thought:

I was talking to a very good friend who owns several hundred units locally. Everything from Tri's to 100+ complexes. He's been in the business for about 20 years and knows his stuff. Right now he has some of the highest vacancy rates ever. Rental rates are dropping and the market is totally oversupplied.

He and his partner have been trying to sell some properties as they are looking to retire. Absolutely no interest what-so-ever. The multi-unit market is worse than the SFR market here. That's scary.

Maybe that red flag is telling you that the market is tanking as we type. Or maybe your market is much better than mine and that little old lady is getting fleeced. Double check - the data should support one or the other.

PS - that red flag is for you alone. Do not worry about how it looks to the underwriter. Just report your market the best you can.
 
Last edited:

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Ditto Mr. Spades.

How long have these units been exposed to the market? Are they all competing with each other at the same time?

Something doesn't smell right.
 
Joined
Nov 7, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Ditto Mr. Spades.

How long have these units been exposed to the market? Are they all competing with each other at the same time?

Something doesn't smell right.

That's Mrs Spades please.......:)
 

Ken Youngkrantz

Thread Starter
Junior Member
Joined
Dec 2, 2003
Professional Status
Licensed Appraiser
State
California
Tri-plex

Okay....some information I forgot. I have 7 active somewhat comparables. 1 has been on the market a long time (200 days). The other 6 have been on the market a max of 70 days. I have 6 sales, none within the last 90 days. Of the 6 sales the max DOM was 68 days, a min of 1 days.

How could I say the market was declining that much when I have no sales in the last 90 days?
 
Joined
Nov 7, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Of the comparables currently listed, what are their price ranges? How long was the subject on the open market? Principal of substitution is king.
 

ZZGAMAZZ

Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Ken: The fact that you have no recent sales could be viewed as reflecting a declining market in regard to the demand side of the S/D equation. Almost by definition the absence of sales will increase the number of active listings. I'm surprised that the number of listings is so small. Down here in San Berdou (city) there are 82 listings for 3 and 4 units properties, without many sales--an exponential decline in value is sure to follow. Did you include Oildale & the area north of Highway 58 along Union in the search? (JMHNO)
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks