Use Of Teardowns As Comps...

[Kate]

Here's one for you.

Subject property on the Atlantic ocean. Find three comps in same area with same GLA, ext.

Drive to the comps. Comp three improvements currently demolished. Now a vacant parsel awaiting new construction.

If you had taken a photo months before and wanted to just use the same photo with a house still on it you may not want to go back out since you have already drove miles months before to inspect.

The fact is that the buyer of that property paid for the location, not the house. This can no longer be used as a comp. But you would not have known the intent of the buyer unless you drove to the sight. Assessors would have nothing on it at that point. Building department would but the field card wouldn't yet.

We must inspect the comps at the time of appraisal. Why not prove you did your job with a photo? You might not HAVE to, but here in the live free or die state we don't HAVE to have car insurance by law. We smart ones do to cover our but.

{ Moderator note: this was split off the comp photo thread... I thought worthy of it's own thread...interesting topic! I ASKED Katherine if she'd mind it being split out}

 

[Tom Foster]

KL,

On your Subject property on the Atlantic Ocean. Find three comps in same area with same GLA, ext.

Reminds me of one I did on the Pacific Ocean. All three comps were torn down by the time I got there.

This was back in 1987 before we had photos on the MLS.

All 3 properties had the exact same lot size and very similar location. The smallest house sold for the most money!!!

Why??? Less to tear down and haul away.

I was able to get the photo negatives from the realtor that was selling the subject, she sure had the shots photos of these comps.

Well I just rode my motorcycle past the subject a few months ago and it was rebuilt as monster of an SFR. That poor little old house build in 1893 is all gone.


I wonder if in 100 years someone will tear that monster SFR down and build a 10 story condo tower.??



Tom

 

[Kate]

Originally posted by Tom Foster@Jan 29 2004, 01:24 PM


I wonder if in 100 years someone will tear that monster SFR down and build a 10 story condo tower.??



Tom

Tom,

I don't know, on the west coast? In 100 years that house may just be underwater.

Seriously though, ocean front property is so valuable that the inprovements may change numerous times with in a generation in parts of the country.

 

[Jungle Boy]

I've seen many homes 3 to 4 thousand GLA torn down before their 10th birthday.

Yeah, all have been on the water.

Here's one :
subject 8 years young, average cond., no special upgrades.
Sale at 2.2 million. Appraised it for 2 million ; price knocked down to 2 million.
Teardown.
I knew that it would need work, but did not see the teardown.
This one had good potential. Good modern layout, etc.

 

[CANative]

Katherine.... why can comp 3 no longer be used as a comp? And if its now demolished, then you would use an MLS photo or a photo from a previous report.

If the house was similar to your subject at the time of sale in terms of location, size, condition, etc. that that sale is a good comp. Who cares what the buyers intention was?

 

[Kate]

Originally posted by Greg Boyd@Jan 29 2004, 08:09 PM
Katherine.... why can comp 3 no longer be used as a comp? And if its now demolished, then you would use an MLS photo or a photo from a previous report.

If the house was similar to your subject at the time of sale in terms of location, size, condition, etc. that that sale is a good comp. Who cares what the buyers intention was?

I should clarify that this was not my appraisal but that of the instructor of my USPAP class first of all.

No, it can not be used because the intent of the buyer was to tear down the house and what they were really paying for was the lot. Sale price + cost of demolishion = lot price.

It can be used as a comp for another lot. If you used this property as a comp on another house you would be seriously undervaluing your subject property.

 

[Rich Hahn]

really screws up The Cost Approach to value unh?

Rich

 

[George Hatch]

Highest and Best Use issue here. If all three of your best comps were sold as land value, guess how the typical buyer is going to be looking at your subject?

I assume you have MLS printouts in hand. Were these properties listed as homes or as land. Are the buyers owner-occupants or are they developers? Answer these questions and all else will be clear for you.

P.S., this is why geographic competency is such a big deal, and why the appraiser on the ground (you) will always have the edge on the remote-control appraisers from afar.

 

[Elliott]

Kathy,
Out on the other coast, tear downs are common,
and they make good comps for other tear downs
and an occasional land valuation.

For some reason, the human specie gets excited
about a view. I think they romantize a view into
serenity. Sort of like the reason stock brokers
own yachts, but seldom sail them.

elliott

 

[Bob Alexander]

Katherine,
Based on you premise, no home can be used as a comp since sooner or later they will all be torn down for one reason or another. As to "intent" where did you come up with the idea that we have to determine what is on the Buyers mind? When was the last time you pushed a Buyer up against a wall and demanded to know what they were buying a property for? <g>
Bob - San Jose