Trouble Measuring External Obsolescence

[Terrel L. Shields]

Works for me.

Your alternative is to flip it and since you mentioned it is a rural area, what is the "ideal" site for a religious facility. It is likely somewhere between a rural area and a built up commercial area.... the spread between the land value and the "ideal land value" is a measure of obsolescence. AI produced a book on "Readings in the Appraisal of Special Purpose Properties" and two segments are on churches... The reading is dated (1981) but useful.

 

[Roger Murdock]

The underlying problem here is that the cost approach is, for all intents and purposes, completely useless in the valuation of a religious facility.

If your subject does not represent the H&B use of the site *as vacant*, you *must* fully account for all Functional Obsolescence. It is very rare for the H&B use of a site to be for the development of a religious facility.

However, it is usually downright impossible to develop any meaningful indication of functional obsolescence in such a case, because the functional obsolescence is not simply a matter of a sub-optimal design or style, but rather a deeper issue of the building being the wrong *type* of use altogether.

 

[Terrel L. Shields]

because the functional obsolescence is not simply a matter of a sub-optimal design or style, but rather a deeper issue of the building being the wrong *type* of use altogether.

which would be a form of economic obsolescence not functional -

 

[Howard Klahr]

Does employing this method seem reasonable and not misleading or should more analysis be performed either A) using the same technique with more sales in a different county and/or B) using another approach altogether?

I don't believe that it is misleading but adequate discussion of the process needs to be done in order to convey the process of the analysis.

Are more sales necessary? I don't know, you are the one in position to answer this one. Can you properly perform an analysis based on the information you have identified so far?

In terms of using another approach altogether, that is why the appraisal process has three approaches to value. They each have strengths and weaknesses and when properly performed, it is amazing how well they correlate.

 

[Pamela Bukys]

Sounds as though you have a "value in use" vs. a market value. The occupants of the building were willing to spend more for the new construction than what it could be sold for from the start. Is the congregation growing?

 

[GregoryK]

Well having done lots of appraisals in Tennessee, you should have plenty of comparable sales . . . there are no shortage of churches, or sales of churches for that matter. Seems like we appraised one a week the whole time I worked in Memphis. I suggest you try Chandler reports, they list every sale in Shelby and Davidson Counties, and most sales in the other counties. You may have to measure the buildings yourself to get the building size and an adequate description. And why not use sales in MS? People are pretty mobile along the TN and MS border. Widen your search, I know of several sales of recently built properties around Memphis, that may allow you to abstract obsolescence. If you are in a rutal area, I would not limit my search geographically to adjoining counties. While having comp sales close in proximity is nice, I think in this instance you may do well to have as many recent transactions as possible.