Where on the grid to make this adjustment?

[Tiffany Gibbons]

On new construction homes, lately I have been asking for contracts on comparables when the opportunity presents itself. I do not know where to make the adjustment for differences in options selected on the grid. I have a comparable, very similar floor plan and GLA on the same cul-de-sac that sold for $30k more than the contract price of my comparable. I got the contract and options selected were ~90k for comparable compared to ~70k for subject.

Completely separate assignment but same question, where on the grid: Subject property has primary bedroom on second floor along with all the other bedrooms, some comparables has the primary bedroom on first with all other bedrooms on second. There is a very clear difference in pricing for this. So where would I put this adjustment if say all comparables and subject have the same amount of rooms??

First time posting on here, so please forgive me

I would use the fuctional utility line or one of the extra ones at the bottom. Primary BR down has more mass market appeal, especially if you can clearly see the adjustment.

 

[Terrel L. Shields]

New construction that is built and then sold, or does not have any customization, seems more reflective of the market than a custom home where people are paying for each feature that specific person(s) want

So sellers do not price that in when selling because they recognize they paid too much? Really? And a 1 year old house is "used". It is not "new". Again, are we prejudging functional obsolescence and how far in the future? One year, Five years? 20?

 

[Joe Flacco]

You could not make an adjustment for the layout / bedroom location, and in the reconciliation state that most reliance is placed on comps x, y, and z which have the same layout. You don't have to make an adjustment for every little difference.

 

[Joe Flacco]

The adjustment is probably not for the primary bedroom being located on the main level anyway. The pricing difference is probably because the main level primary suite requires a larger footprint for the dwelling. So it probably has a bigger footprint, bigger basement, larger roof, etc.

 

[Mike Ault]

So sellers do not price that in when selling because they recognize they paid too much? Really? And a 1 year old house is "used". It is not "new". Again, are we prejudging functional obsolescence and how far in the future? One year, Five years? 20?

Well, where in your "cost approach" would you factor in the functional obsolescence demonstrated for an underground shooting range? Surely you don't think that 99.9% of the buyers on the open market would pay as much as it cost to originally construct such a thing? (with the possible exception of myself).

 

[J Grant]

I said one buyer, for one custom home. I think you misread. One buyer does not make a market. Just because that person wants a full size indoor basketball court doesn't mean everyone is willing to pay for it what that person did. The less common the features, the less chance it will sell for market value. Its not a hard concept.

Correct, and that is why an opinion of market value is tied into the estimate of market exposure (DOM). If selling a mainstream house takes 60-90 days, it might take 12-14 months to sell the oddball house. (for example )

The MV definition references the typically motivated buyer - not the oddball, one in 10,000 buyer -

 

[shrubberyvaluation]

Correct, and that is why an opinion of market value is tied into the estimate of market exposure (DOM). If selling a mainstream house takes 60-90 days, it might take 12-14 months to sell the oddball house. (for example )

The MV definition references the typically motivated buyer - not the oddball, one in 10,000 buyer -

To put in prospective I did an appraisal on a house that was bought as new construction and no one ever lived in it. They originally planned to have their elderly parents live in it and changed. So resold it never lived in. They took a 10-15% loss reselling it from what they paid. yes there is some wear from the elements, but still.

 

[Joe Flacco]

To put in prospective I did an appraisal on a house that was bought as new construction and no one ever lived in it. They originally planned to have their elderly parents live in it and changed. So resold it never lived in. They took a 10-15% loss reselling it from what they paid. yes there is some wear from the elements, but still.

That just depends on market conditions. If you have new construction available, completed, and move-in ready, the the existing house is going to be less competitive. If the buyers have to wait 6-12 months for new construction then most likely not going to see any discount for the recent construction. It could even sell for a little bit more.

 

[shrubberyvaluation]

That just depends on market conditions. If you have new construction available, completed, and move-in ready, the the existing house is going to be less competitive. If the buyers have to wait 6-12 months for new construction then most likely not going to see any discount for the recent construction. It could even sell for a little bit more.

Yes this has been my experience as well.

 

[Terrel L. Shields]

Well, where in your "cost approach" would you factor in the functional obsolescence demonstrated for an underground shooting range? Surely you don't think that 99.9% of the buyers on the open market would pay as much as it cost to originally construct such a thing? (with the possible exception of myself).

The scope and nature of 'upgrades' cannot be ignored. But when we see buyers given a choice - Formica v granite counter tops, crown molding or not, Heat pump v conventional, then what is the difference that when you used to buy a car with a bigger motor, 4 speed, bucket seats and FM radio? You paid extra and you got extra when you sold. If you cut a hole in the hood and added a Roots blower on top of the engine...not so much.