What appears to be a complex appraisal question? Asking for General Reference.

[Ray Miller]

What appears to be a complex appraisal question? Asking for General Reference.

Resort setting, on lake, golf course, swimming pools, parts are condotel units, parts are condo units, resort not completed, general contractor in bankruptcy, as many as 9 condo units and condotel units will be coming on the auction block yet in Aug and Sept, on site sales still happening with on site real estate agents. Some of the amenities are on standby and not being completed at this time.

Retail sales using on site high pressure sales people have sold a few units in the resort this spring and summer for the $300K to $550K selling price.

Auction Sale units are selling for $90K to $110K for the same units with some units not getting an opening bid. Marketing time for the auction units are 60 to 90 days out in state, regional and local papers, with a strong presents on the internet as well. All auction units are in new condition, some have never had a person in them.

Other condo resort developments and units in the area are in trouble with two more developments going in to bankruptcy. Single Family home developments some are in foreclosure and headed for bankruptcy. Sale are very slow this summer in the resort area, tourist business appears to be down over 50%. Deep discounts on rental rates, and recreational type business.

Under these conditions what would you use for comparables, the auction units because there are more of them that sold and didn’t sell, the high pressure selling units that the out of town people don’t know the entire story and history of the resort? How would you establish a value for retail lending, for REO appraisals? Could there be two different values with in the resort?

 

[stefan olafson]

Ray,

A part of the definition of Market Value is: "... after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller each acting prudently , KNOWLEDGEABLY, ...... and assuming NEITHER is under undue duress"

There appears to be two markets, one with knowledgeable buyers and one without? I think I'd use the auction sales to establish a value for retail lending and for REO property appraisals.

Yes, there are two different values, unfortunately some people buy the sizzle not the steak, and that is happening now as it has forever....

 

[Ray Miller]

Ray,

A part of the definition of Market Value is: "... after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller each acting prudently , KNOWLEDGEABLY, ...... and assuming NEITHER is under undue duress"

There appears to be two markets, one with knowledgeable buyers and one without? I think I'd use the auction sales to establish a value for retail lending and for REO property appraisals.

Yes, there are two different values, unfortunately some people buy the sizzle not the steak, and that is happening now as it has forever....

That what I would be using, but because of a review request I received, (I am gun-shy now of posting here because my poor bod was attack two weeks ago in a manner that would be fit a whisle pig) the OA is using the current sales from the on site real estate office, not even noting the: Bankrupcy, the auction sales or the number coming up for auction or the condition of other resorts in the area. Trying to get a feel for what other appraisers would do under these conditions.

 

[stefan olafson]

Ray,

You have to include the entire market in the appraisal process. If the original appraiser used three 'on site real estate office' sales and didn't mention the market activity elsewhere, then he did the appraisal incorrectly and in violation of USPAP. You have to at least mention what is going on in the neighborhood.

If I were to do the assignment and believe the 'on site' sales were market sales, I'd at least mention in the report the activity in the REO and auction sales. I don't think I could utilize just the 'on site' sales though, the market is telling you something else.

 

[Michigan CG]

.........the high pressure selling units that the out of town people don’t know the entire story and history of the resort?

Why would you even consider this? Using sales from uninformed buyers? When it goes back to the bank who is the next buyer. This question alone proves you are in over your head.

How would you establish a value for retail lending, for REO appraisals? Could there be two different values with in the resort?

This question proves it again.

This is a complex assignment and above your license level.

 

[stefan olafson]

I'm not sure it's above his license level? Ray has years of experience in real estate appraisal and in auctioneering. He acknowledges the facts and wants some opinions from other appraisers.

I believe part of the competency provision is to state your knowledge or lack thereof and the steps you have taken to become competent....

Isn't what Ray doing taking some of those steps? I probably wouldn't just use opinions of others, I'd either associate with someone with more knowledge on these types of properties or find some publication that would help me get up to speed.

I've never done an auction, don't have that license and don't think a lot of appraisers do. But in the course of our research we sometime have to look at auction sales prices to determine if they are affecting the market as a whole. Ray has that expertise down pat.

 

[Ray Miller]

Why would you even consider this? Using sales from uninformed buyers? When it goes back to the bank who is the next buyer. This question alone proves you are in over your head.

Quote:
.........the high pressure selling units that the out of town people don’t know the entire story and history of the resort?
"Why would you even consider this? Using sales from uninformed buyers? When it goes back to the bank who is the next buyer. This question alone proves you are in over your head."

Mr. Evans,

I feel very few out of area buyers in any recreational area knows the full story of what is going on in RE Sales in the area. The pressure is very high on agents to make a sale. In many cases its like a pressure cooker. (this is from being around resorts all over the United States and having been a Senior VP for Resort Development Internation for the Equine Division). Buyers are riped off every day. Yet these sales are used every day as comparables for setting value by appraisers.

You as an appraiser walking into the/a resort, how would you even know the kind of pressure these people are put under? How would you even know about the auction sales that had taken place or were about to take place? I can assure you that the resort sales staff is not going to say a word to you about it. (sample of pressure, a tag team of sales agents amounting up to two or three people, car keys being taken and held until the tour is over, pressure to sign now on the dotted line, husbands and wives seperated and pressured to get the other one to sign, agents not disclosing the real market)

Many of the events and things I post here are for FYI to others and also helps me to get a feel for what other appraisers might do. By no ways do I have all the answers or the experience. However with that said I have been appraising for some 35 years, been on appraisal teams for multi million dollar projects for recreational, farms and ranch property and the livestock and personal property end of things as well for appraisal. In addition I have years of experience in the Auction Industry.



This question proves it again.

This is a complex assignment and above your license level.

Do we just base ones knowledge on his or hers license level. Meaning that if one had a CR or CG they could appraise any thing and know what one is doing?

Reminds me once when Dr. Collier DVM introduced me to some fourth year vet students. He told them to pay close attention to what my lectures were about, because I was the person he had chosen to teach them about equine lameness in relation to back pain cause by poor saddle fit and rider imbalance. That I was one of the top lameness farriers he had the pleasure of knowing. That I didn't have a DVM behind my name, but understood more then most teaching and practicing DVM's on the subject of lameness.

 

[George Hatch]

I seriously wonder why you take on some of these assignments. The juice can't possibly be worth the squeeze.

I'm a veteran CG with a pretty broad range of exposure to different types of appraisal problems and I routinely decline assignments that are too far outside of my comfort zone.

Some fees just aren't worth earning. To me, anyways.

 

[stefan olafson]

Who's to say Ray has taken on the assignment?

I think a lot of Rays postings are meant to get our brains engaged and really make us think about what we are doing on a daily basis....

In a typical market there are always a few easily found and verified sales, do we take the time to really understand the market when we appraise? Or are we sometimes guilty of overlooking some things to arrive at defenseable value and asking for our fee????

Take a look at Moh's post on the $625,000 property in CA??? How did this get financed when the neighborhood is decimated by foreclosures? Did the appraiser look at MLS sales of non foreclosure property and arrive at a value because looking up the foreclosed sales may take a trip to the courthouse?

 

[Ray Miller]

I seriously wonder why you take on some of these assignments. The juice can't possibly be worth the squeeze.

I'm a veteran CG with a pretty broad range of exposure to different types of appraisal problems and I routinely decline assignments that are too far outside of my comfort zone.

Some fees just aren't worth earning. To me, anyways.

No I have not accepted the assigment. I will not accept the assigment for reason I can not disclosed here on the forum at the present time, but I sure would like to accept the assigment.

I can assure you that the appraisal sent me for review will be sent to the state as a complaint.

If I were to do the assigment the fee would have been a very large number of beaver pelts just because of the problems at the resort.

I run across these problems because it is the area I appraise in. I post many things to bring it to the attention of others and to see how others would handle the problelms. This area is a big mixture of just about all types of appraisals that can be had.