Unique property in unique location

[DanWaechter]

I am a relative newbie that was assigned to do an appraisal on a unique property in Alexandria, Virginia, just outside of Washington DC. Here are the specifics. Rancher house built in 1940 with a stone exterior. No basement. The attic was expanded and made into a second floor. The property is on a half acre in a very small community of homes (approximately 25) that were built on a piece of land between the George Washington Memorial Parkway and the Potomac River. The property is likely worth 2-3 times what the home is worth, and it is possible that someone may be willing to pay upwards of 800000 to 1 million just for the right to own that piece of land as it is so unique, wooded, and there are only a few pieces of land in such an incredible location.

Obviously my problem are comps. I cannot find a rancher/rambler style home that was built from stone, and second, this neighborhood is so unique and desirable, people dont move. All the homes are completely different in the neighborhood, and even though I can find a home or two that have sold in the neighborhood, they are nothing like the subject.

My dillema. Find a comparable house outside the area, and make a HUGE adjustment to the property value, or use a home in the neighborhood and make huge adjustments because the homes look nothing like one another, but their property values are pretty similar. Any help or suggestions on how to appraise this would be greatly appreciated. Please let me know if you need any additional information. Thank you

 

[Lee in L.A.]

Find a comparable house outside the area, and make a HUGE adjustment to the property value, or use a home in the neighborhood and make huge adjustments because the homes look nothing like one another, but their property values are pretty similar.

That's at least part of your answer. Do both. You probably want to use more than 3 comps too. And do lots of explaining of adjustments, and comp research, lack of comps, etc.
Have fun.

 

[George W Dodd]

Good advise, use multiple sales to bracket different features.

I am assuming that your supervisor has either certified residential or general appraiser license.

This would be considered a complex property and by VA must be done (signed off on) by one of the higher class of license.

 

[Pamela Crowley (Florida)]

All good advise. What is the Highest and Best Use of this property?????

Does the house actually add any value to the land????

 

[DanWaechter]

The highest and best use is likely as it is now. The property cannot be developed into any commercial type of building. This particular home was previously one of three homes on an estate. The three homes were split back in the 1960's and sold separately. The subject property is also surrounded by other custom built homes, some of which range upto several million dollars for those that have property that are on the Potomac River.

This is a strictly residential area, but I have been told by the homeowner that one individual has been trying to buy up pieces of property over the years, to possibly tear down a few and build new homes. No matter what the appraisal value of this will be, someone WILL likely pay several hundred thousand dollars more than that.

 

[Pamela Crowley (Florida)]

It seems to me that if the value of the land is that high and there are large, newer, high-end single family dwellings surrounding this property, that the existing house would likely be torn down by most purchasers of this property. If that is the case, the house may not really even be an added value to the land. This is a tough assignment. Good luck and let us know what you do.

 

[DanWaechter]

I doubt that it will be torn down. Although there are a few newer upper end homes, there are still quite a few that add the historic aspect to the area and region. As I indicated before, this home is built out of a stone exterior, which is very desirable in this area. The home is absolutely fine the way it is, but I would imagine that whomever bought the home would want to do some updating. It definetely has it's charm and character. There is only one person who is trying to buy up land, and the current homeowner has indicated that they WILL NOT sell the home and land to that person, even if he does offer 100000 more than anyone else. They want to preserve the area as do most of the other neighbors.

 

[wyecoyote]

Dan,

As others suggested use multiple sales (come at it from both angles that you describe in your first post). You indicate one or two sales in the area. Use both of them regardless of style, then use sales outside of the market area for the construction style and anything else you may need to bracket the subject end up with six or more comps but oh well. Explain yourself well and the appraisal should come out fine. Perhaps high G&N but what else can you do.

Ryan

 

[DanWaechter]

Lee, George, Pamela and Ryan,

Thanks for your input and recommendations. I will see what I can do to pull comparables for both the style of the home (even if outside the community) and then try and find sales of homes within the community, despite their similarity in style. That does sound like the most logical solution. There will be adjustments on both ends, but by having 6 comps in two different brackets, I should be able to come up with a pretty reasonable estimate. Thank you again.

Dan

 

[Pamela Crowley (Florida)]

Dan,

Hope you didn't mind my playing Devil's advocate, but sometimes looking at it from all angles helps you focus in to what is the best course.

Good luck, again!