Tips for Dealing with Complex Single Family Residential Appraisals-Page 5

3. Abandoned Home in the Forest
I recently assisted on an appraisal of an abandoned house in a forest that had not been maintained for at least 30 years. This was a highest and best use problem: what should the owners do with the property? The subject’s condition was essentially unsalvageable; the existing improvements were a safety hazard. Additionally, environmental regulations placed severe restrictions on building on the site today.

Going back three years I found several examples in the county of unbuildable lots. These sales were my comparables. Recommendation to the client was to hold for a time when the subject’s market had improved enough to make a sale feasible.

I expanded my market to include the entire county because of the rarity of unbuildable lots, expanded my time horizon for the search, and spent most of my effort on highest and best use. I was fortunate to partner with a very experienced appraiser to guide me with the highest and best use analysis and report write-up.

4. Private Party Cohousing Assignment
Cohousing is a specialized form of planned development living designed specifically to encourage community. Management is participation based by the community and often based on consensus. Projects in my area have a large kitchen and dining area for the entire community to gather weekly for communal meals. Demand for cohousing is high with waiting lists and very few sales transacting formally through the local MLS. I was asked to determine current market value for someone in a nearby cohousing community when the last sale in the community had occurred eight years prior. No one in the community wanted to sell during the collapse of the real estate market during the great recession. This appraisal was complex because of the lack of recent sales.

To determine competitive sales, I examined sales in the cohousing community from prior to the housing market crash and compared those sales to others in nearby planned developments at that time. I then looked at recent sales in those projects that competed with the subject’s project prior to the housing crash. I used the recent sales from the competing projects plus I time adjusted forward the most recent sale in the subject’s project (from 8 years ago) and used these as comparables. Indicated range of value was relatively narrow. I had competency in cohousing because a mentor had introduced me to it in the past. This assignment has turned into three more at relatively high fees but with less time required because of my initial research.

5. College City Eight Year Old Home Never Lived In

The subject was an average quality home built in 2006 that was never lived in on a one acre lot. It backed a cemetery and was located in College City, a small unincorporated community in Colusa County, northwest of Sacramento. There were sales in the closest town on normal density residential lots and on 10+ acre lots, with nothing in between. Also, Colusa is covered by two MLS systems. Complex issues to deal with included the subject’s near new condition, the subject’s in between lot size, the subject’s location backing a cemetery, and combining data from both MLS systems for market analysis.

This assignment required me to focus on placing the subject. It sits between the in town residential market and the residential acreage market. The marginal difference for lot size in town is much higher than the difference for acreage properties. So I adjusted the in town residential homes $1 per square foot up for lot variance and the acreage properties down $7,500 per acre to meet the subject in the middle. I used new construction to bracket the subject’s not quite new (C2) condition.

To determine the impact of the subject’s location next to the cemetery, I searched but found no sales at all in Colusa County adjacent to a cemetery going back 10 years. I found sales adjacent to cemeteries in nearby Yolo County and used these as proxies for the subject. I interviewed market participants and conducted a survey of local real estate agents. The survey, interviews, and data from Yolo County all agreed-no impact from backing the cemetery.

Because of my experience in this market, combining data from the two MLS systems was just another step in the analysis.

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