Value over highest comp

[fishbig010]

Hi,

I have read some posts about this, but I wanted to get some opinions before I sent this report in. My subject property is unique and has a tile roof, with a 500 gallon propane tank and generator to power the house in case of power outages. I'm in Florida, so that is really useful come hurricane season. In addition, the home has some interior updates to the kitchen and master bath. Tile roofing is not too common outside of cookie cutter developments. The propane and generator system has become more popular over the past few years in my area, but finding comparables is hard to do, as people do not want to sell homes with this feature. I have seen the propane and generator add approximately 2% in value to homes in similar markets in the area. The property is under contract for $395 and my comps range between $340-$369, with the highest sale price being $369 within 3 miles (I'm not using comps from that far away, just wanted to give more information). The market has been booming in the area, and prices have increased about 6% over the past year. I could not find comparables in the subject's market area with gas and generator, but my comps do have updates, and a couple have custom pools. Would it be unreasonable for me to have a value over the $369 from my highest comp because of the generator and market increase? I haven't looked into market reaction to tile roofing in the area yet, as most homes have shingle or metal roofing, but I'm pretty sure it will have an increase in value as well.

I know everyone likes to tell people who post how dumb they are, I'm just looking for a couple opinions or past experiences to help me out. Thank you everyone! Have a great Sunday!

P.S. I'm not a trainee, I just don't know how to get my status changed on here lol.

 

[J Grant]

Kudos to you for posting it takes guts to put ourselves out there !
I am in FL too and imo a generator ( I assume you mean a whole house generator with inground tank ) is not going to be worth 30k - in after market value - anybody can buy a generator at any time and add it via financing, the PACE program or just paying for it and depending on size of generator can cost aprox 10 -15k / more or less. I rarely adjust separately for just a generator, I reconcile at higher end because of it. Impact windows are the high cost, big value item that add to price, as does a pool. Storm impact windows look great, cut down on AC bills and offer security in addition to storm protection .

A tile roof is nice but might be an over improvement in terms of adding much value over a comp tile roof, maybe it would add to 5k -10k..but normally I include it in the upgrades as a whole .

From what you are telling me I do not see a MVO supported over the top end of 369k....but without knowing actual prices of your comps it is hard to say, you provided only adjusted range of the comps. If you opine higher than adjusted range there has to be good reason, a very high quality subject, great view or the like. What were the before adjusted sale prices ? If you have a reasonably similar sale with a price of 375k or so might come in there....hard to say not knowing anything else over a bb

 

[fishbig010]

Kudos to you for posting it takes guts to put ourselves out there !
I am in FL too and imo a generator ( I assume you mean a whole house generator with inground tank ) is not going to be worth 30k - in after market value - anybody can buy a generator at any time and add it via financing, the PACE program or just paying for it and depending on size of generator can cost aprox 10 -15k / more or less. I rarely adjust separately for just a generator, I reconcile at higher end because of it. Impact windows are the high cost, big value item that add to price, as does a pool. Storm impact windows look great, cut down on AC bills and offer security in addition to storm protection .

A tile roof is nice but might be an over improvement in terms of adding much value over a comp tile roof, maybe it would add to 5k -10k..but normally I include it in the upgrades as a whole .

From what you are telling me I do not see a MVO supported over the top end of 369k....but without knowing actual prices of your comps it is hard to say, you provided only adjusted range of the comps. If you opine higher than adjusted range there has to be good reason, a very high quality subject, great view or the like. What were the before adjusted sale prices ? If you have a reasonably similar sale with a price of 375k or so might come in there....hard to say not knowing anything else over a bb

Thank you! Yes, it's a whole house generator with an inground tank, and it does have impact windows and sliders as well. There's no way I'm going to be anywhere the contract price, but figure I'm going to end up in the 370-380 range. My comps are $369- same house minus the gas and generator. $348- non impact, non custom pool. $362- New roof, and A/C, non impact, custom pool. $345- Non impact, no interior updates, non custom pool. Those are sales prices, and not adjusted values. I haven't finished extracting adjustments. These all sold within the past 3 months, and market condition adjustments shouldn't have a significant impact.

 

[J Grant]

Thank you! Yes, it's a whole house generator with an inground tank, and it does have impact windows and sliders as well. There's no way I'm going to be anywhere the contract price, but figure I'm going to end up in the 370-380 range. My comps are $369- same house minus the gas and generator. $348- non impact, non custom pool. $362- New roof, and A/C, non impact, custom pool. $345- Non impact, no interior updates, non custom pool. Those are sales prices, and not adjusted values. I haven't finished extracting adjustments. These all sold within the past 3 months, and market condition adjustments shouldn't have a significant impact.

I do often make a line item adjustment for impact windows because they are a high cost/high value item. Try to find a comp with impact windows to bracket the feature and adjustment ! Even if 5 miles away or year plus old, or needing a size adjustment . Agree sounds like not SC price but 370-380 range supportable

 

[fishbig010]

I do often make a line item adjustment for impact windows because they are a high cost/high value item. Try to find a comp with impact windows to bracket the feature and adjustment ! Even if 5 miles away or year plus old, or needing a size adjustment . Agree sounds like not SC price but 370-380 range supportable

Thank you Grant, I see you on a lot of posts on here, and you help a lot of people! I think that's awesome!

 

[bnmappraisal]

What type of assignment is this?
Fannie/Freddie?
AMC?
Direct Bank?

Not that it should matter, but many AMCs freak the ** out and can't understand "how" an appraiser can be higher than their highest sale

Also, I would search back farther in time (at least 12 months) and make market/time adjustments if necessary. Just staying within 3 months limits your pool
Maybe you'll find a sale (or 3!) that sold 8-12 months ago that's a model match.

I know some on here will disagree with me, but have you also discussed the list price with the listing agent?
a.k.a. Where did they come up with that price?
how many showings did they have?
Are there multiple offers?
What did people looking at the subject have to say about the gas/generator?

As long as you don't discuss your findings and/or value, there's nothing wrong with that. That at least will give you an idea of what the seller and list agent were thinking when listing the property

I also would be looking at current active and pendings in the area. This also gives you an idea of current market conditions within the neighborhood and what people "Think" their houses are "worth"

 

[David S. Roberson]

Sadly, sounds like superadequacy.

 

[RCA]

Hi,

I have read some posts about this, but I wanted to get some opinions before I sent this report in. My subject property is unique and has a tile roof, with a 500 gallon propane tank and generator to power the house in case of power outages. I'm in Florida, so that is really useful come hurricane season. In addition, the home has some interior updates to the kitchen and master bath. Tile roofing is not too common outside of cookie cutter developments. The propane and generator system has become more popular over the past few years in my area, but finding comparables is hard to do, as people do not want to sell homes with this feature. I have seen the propane and generator add approximately 2% in value to homes in similar markets in the area. The property is under contract for $395 and my comps range between $340-$369, with the highest sale price being $369 within 3 miles (I'm not using comps from that far away, just wanted to give more information). The market has been booming in the area, and prices have increased about 6% over the past year. I could not find comparables in the subject's market area with gas and generator, but my comps do have updates, and a couple have custom pools. Would it be unreasonable for me to have a value over the $369 from my highest comp because of the generator and market increase? I haven't looked into market reaction to tile roofing in the area yet, as most homes have shingle or metal roofing, but I'm pretty sure it will have an increase in value as well.

I know everyone likes to tell people who post how dumb they are, I'm just looking for a couple opinions or past experiences to help me out. Thank you everyone! Have a great Sunday!

P.S. I'm not a trainee, I just don't know how to get my status changed on here lol.

If you can document a pattern of increasing value for a certain feature and your subject has more of that feature than the comps, all other things being kind of equal, then we would certainly expect the subject to have a higher value. Valuation of homes on the high and low end is more difficult because you can't "balance" your comps. You see, balancing if done well, and more to the point if it can even be done at all, negates the effect of making errors in the unit adjustment. So, for example, if the actual adjustment for GLA for houses in the subject neighborhood is $200/sf and you use $50/sf, it won't have any effect as long as for every comp that is X sf below your subject, you can find another comp that is X sf above the subject value. ... Or something close. But when you get to the upper value it is a different story. Say your subject has 3500sf GLA and the largest comp is only 3,200sf, then the exact value of your adjustment of GLA becomes extremely important to the overall value. So, now you had better be very good at regression and have the best statistical tools. 300sf x $150= $45,000, so using $50/sf will result in a value that is $45,000 too low. I remember when I started appraisal and was told to use $25/sf here in California - and I determined that homes were more around $200/sf. Back then, the whole idea is that you would give beginning appraisers easy assignments, subject properties that could be easily balanced with comps on important features - and you would tell the appraisers to find the most similar comps in age and GLA, use a low "conservative" adjustment and then let them have a go at it. Of course, if they are particularly good at appraisal, then they would eventually wind up doing those difficult assignments where you can't balance the comps and hopefully discover that $25/sf was BS, - hopefully before it was too late.

 

[fishbig010]

What type of assignment is this?
Fannie/Freddie?
AMC?
Direct Bank?

Not that it should matter, but many AMCs freak the ** out and can't understand "how" an appraiser can be higher than their highest sale

Also, I would search back farther in time (at least 12 months) and make market/time adjustments if necessary. Just staying within 3 months limits your pool
Maybe you'll find a sale (or 3!) that sold 8-12 months ago that's a model match.

I know some on here will disagree with me, but have you also discussed the list price with the listing agent?
a.k.a. Where did they come up with that price?
how many showings did they have?
Are there multiple offers?
What did people looking at the subject have to say about the gas/generator?

As long as you don't discuss your findings and/or value, there's nothing wrong with that. That at least will give you an idea of what the seller and list agent were thinking when listing the property

I also would be looking at current active and pendings in the area. This also gives you an idea of current market conditions within the neighborhood and what people "Think" their houses are "worth"

It's an AMC assignment.
I searched back to 12 months, within 3 miles, and these comps just happened to be the most comparable to the subject they are within 1.5 miles and sold in the last 3 months. I was going to call the realtor tomorrow, I try not to call people on Sundays to talk shop. The current market here has seen a decrease in active listings due to lowered interest rates, and the only "comparable" listing within 3 miles is listed at $299, I may have to back and double check that, but it's what I have listed in my workfile. The majority of homes that have been listed on the market have gone pending in 1-2 days with numerous offers over asking price. I'm in Lee County where we have one of the fastest growing housing markets in the country. I didn't want to go over 12 months, just because the market conditions have changed so much in the past 12 months, and large adjustments are usually red flags.

 

[glenn walker]

A Good Post and not a dumb question. What you are dealing with is a fairly common situation and where it gets difficult is when we know the property may be worth what it sold for but we simply do not have the sales data to support it and it falls outside the range of the adjusted sales. With that being said I would also dig deep and look for a few pending sales if they are at higher prices and use those for additional support . As far as the High Impact Windows, I assume those are for high winds and hurricanes, in my area we dont have those but upper end dual pane windows are adjusted at about 2% to 2.5 % for there superior energy efficiency. The generator would probably not bring in a dollar for dollar cost new but I tend to think buyers and market participants would pay up to 50% of its cost new and in an-area like yours maybe more. SO NOW the question is can you exceed the highest adjusted sale ? If all of your gross sales prices are lower than $395,000 , and your adjusted values are-also lower than $395,000, then I would say "no" and you are going to end up at the high end of your adjusted range and run out of gas at about $365K to 370K The problem is the Subjects SC Price is 7% higher than your highest comp and 16% higher than your lowest sale and so the $395K is just not there.