Using a townhome as a Comp in 1004.

[Lost Cause]

A condo is a freaking single family residence. A town home is a single family residence.

Ahh, so then the difference between the two is that one is "freaking" and the other not?

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Seriously, there has been loads of misinformation in this thread.

First of all, it is fundamental that "condominium" describes a form of ownership and has nothing to do with the form of the structure involved. Then, one needs to recognize that "townhouse" is a form of structure. These two things are not related in any way.

To verify my own understanding that a "townhouse" is an attached residence, I refered to both The Dictionary of Appraisal (first edition) and Real Estate Appraisl Terminology, it's predecessor. Both defined "townhouse" as an attached residence, and one elaborated that a "townhouse" may also be described as a rowhouse.

I believe these definitions are universal and don't vary from market to market.

For those completing form-style appraisal reports, it is the form of ownership which indicates which form should be used.

 

[Don Clark]

Appraisers should not confuse "condo"--a form of ownership--with a property-type (SFR attached; here, a townhome).

Lee,

A lesson never learned by appraisrs.

Condo = Form of ownership

Townhouse = A style of archetecture.

 

[J Grant]

As they are diff form of ownerships...condo vs fee simple TH, appraisers should understand what that means in terms of buyers and whether to mix them as comps. There is no "rule" against using a condo comp that has a townhouse style of architecture if subject is a fee simple thownhouse .

However, UW and reviewers might red flag it so appraisers need to understand the differences and if they choose to use the comp, disclose the difference, and explain that it is market accepted (assuming it is), and thus a reasonable substitute and that the typically motivated buyer would consider both.

A condo that has TH architecture, part of what makes it a condo is shared ownership of the land. The owner of the condo unit does not own outright the land under their unit, thus, either no site size will show up on condo docs or a zero or a large number which relates to acreage in community. These condos, however, might have use of a yard or even be allowed to fence a yard area in (depending on condo doc rules). So, would a buyer consider either ? Depends on maintenance fees and market acceptance among other factors.

The rules and regs tend to be stricter in condos. Many buyers therefore who would buy a fee simple townhome that allows dogs and unlimited rentals won't buy a similar looking TH style condo that does not allow dogs and only allows renting once every 5 years, for example. On the other hand, some buyers want the stricter rules of a condo as they can control what goes on in community. So the comparisons have to make sense, and the more far apart the community rules, maintenance fees and amenities are, the less likely a property is to qualify as a comp. Similar fees, amenities and rules, the buyers are less likely to care which form of ownership is present.

 

[SutnNC]

Using a townhouse within the 1004 form is fine. Just be sure not to use the 1004 form for a townhouse-style condo!!!

:new_popcornsmiley: