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Urgent! Incurable Functional Obsolescence

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BlueCrow21

Freshman Member
Joined
Jul 28, 2014
Professional Status
Certified Residential Appraiser
State
California
Good morning!

So I have a property here in Sacramento, California that has a very odd layout. A master bedroom and bathroom addition were completed with permits ten years ago; however, there was no hallway added to the new master suite. In effect, the only way to access the master suite is through a half bathroom. On the other side of the half bathroom is a doorway that leads to the master bathroom which then leads into the master bedroom. Its a bit confusing, but effectively, the only way to access the master bedroom is to go through both bathrooms. The only way to access the master bedroom if one of the bathrooms is occupied is to go through the garage (a secondary garage door was created in the master bedroom to provide access directly from the master to the garage). Obviously, this is a serious case of incurable functional obsolescence as the cost to install a hallway around the bathrooms and into the master would cost more than the value it would add.

I've poked around on the MLS and am unable to locate any comps with similar functional obsolescence. They may exist; however, listing agents out here are not so forthcoming with oddities in properties.

I'm struggling on how best to handle this... it doesn't seem there would be any way to fully support an adjustment in the sales comparison approach. Would you make an adjustment? Or perhaps I may just remain conservative in my opinion? Obviously, market participants would have an adverse reaction to the property. However, the property is currently pending sale with 2 offers which does support market acceptance of the FO. Any help or insight is greatly appreciated!
 
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Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
How does the size and room count of the subject compare with those of other homes within the neighborhood? Are the improvements all around the same vintage? Have other homes within the neighborhood undergone renovations/additions? If so, how has their layout been impacted?
 

BlueCrow21

Freshman Member
Joined
Jul 28, 2014
Professional Status
Certified Residential Appraiser
State
California
Size, room count, and updates are common in the neighborhood. This is an older, established area in which additions are uncommon. The sellers converted an old bedroom into a dining room (removed walls) and then slapped the addition on the end of the house behind the garage. It has interior access and was permitted. It just has no flow and creates a huge access problem to the master. I'm honestly surprised the city approved this layout when finalizing permits. I would say this layout is unique to this property and not common.
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
I would say this layout is unique to this property and not common.
OK now look at the issue two ways 1) what is the value without any consideration to the negative functionality? 2) what is the value as if the addition did not exist?

These two values will create end points (upper and lower) of a range within which to work. If the layout is a significant detriment clearly the property will take longer to market than if it didn't have the issue. Talk with agents in the area how the layout would impact the (presumed extended) marketing time. Weigh this against the "benefit" of the additional area/room(s) as a result of the modification. This will help you on where within the above range to lean.
 

BlueCrow21

Freshman Member
Joined
Jul 28, 2014
Professional Status
Certified Residential Appraiser
State
California
The property was marketed for 6 days before entering contract so no extended marketing time surprisingly. I would think this supports the market's acceptance of the functionality issue especially with multiple offers within 6 days. Very low marketing times are common out here.

Thank you for your insight!
 

Mark K

Elite Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
From what I've observed is that any adverse effect on value from FO problems decreases as the price range decreases.

In this area, FO problems in lower price homes are virtually ignored by the market. Buyers are happy to be able to afford a home and the issue you discuss, while unusual, is little more than a minor inconvenience. Adverse effects on the value increase as the price range increases.

What some appraisers consider as bizarre is often tolerated with indifference by the market. Multiple backup offers on your subject seems to support this. I'd probably value it towards the lower end of the adjusted range, explain why, and not lose sleep over it.
 

BlueCrow21

Freshman Member
Joined
Jul 28, 2014
Professional Status
Certified Residential Appraiser
State
California
From what I've observed is that any adverse effect on value from FO problems decreases as the price range decreases.

In this area, FO problems in lower price homes are virtually ignored by the market. Buyers are happy to be able to afford a home and the issue you discuss, while unusual, is little more than a minor inconvenience. Adverse effects on the value increase as the price range increases.

What some appraisers consider as bizarre is often tolerated with indifference by the market. Multiple backup offers on your subject seems to support this. I'd probably value it towards the lower end of the adjusted range, explain why, and not lose sleep over it.

I agree with you Mark! Thanks for your help
 

nstanbru

Senior Member
Joined
Feb 19, 2009
Professional Status
Certified General Appraiser
State
California
[QUOTE="BlueCrow21, post: 2753455, member: 145986"secondary garage door was created in the master bedroom to provide access directly from the master to the garage).[/QUOTE]

I would be more concerned about this.
 

BlueCrow21

Freshman Member
Joined
Jul 28, 2014
Professional Status
Certified Residential Appraiser
State
California
[QUOTE="BlueCrow21, post: 2753455, member: 145986"secondary garage door was created in the master bedroom to provide access directly from the master to the garage).

I would be more concerned about this.[/QUOTE]

The newly created garage door is a fire-rated door and was approved by the city when the addition was completed. There is also a rear exterior door in the master that provides access to the backyard so egress issues are not a problem.
 

Evincere

Elite Member
Joined
Dec 30, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Good morning!

So I have a property here in Sacramento, California that has a very odd layout. A master bedroom and bathroom addition were completed with permits ten years ago; however, there was no hallway added to the new master suite. In effect, the only way to access the master suite is through a half bathroom. On the other side of the half bathroom is a doorway that leads to the master bathroom which then leads into the master bedroom. Its a bit confusing, but effectively, the only way to access the master bedroom is to go through both bathrooms.!

Maybe, it was designed for someone with a very serious incontinence problem? Stranger things have happened :)
 
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