Appraising a property with no comps
June 8, 2008 by Curtis Seltzer · 5 Comments
My wife and I live in a county with 2,500 full-time residents. We have a lot of cattle, sheep and trees. The county seat is a town of about 200.
Melissa is one of two lawyers in the county. This is one of our county’s major cools.
She recently bought a 90-year-old house to use as her office. It’s a simple two-story, two-over-two design with an enclosed back porch. She paid a little over $90,000 and put $50,000 into the conversion. Many of the renovations were specifically done to accommodate her clients and her law practice–extending the porch and making it handicap-accessible was about $10,000 alone. She moved the kitchen from one of the two large rooms downstairs back into one of the two small rooms in the enclosed porch. It’s a serviceable kitchen for an office, but too tight and unwieldy for a residence. The former kitchen/dining room area is now the legal secretary’s office. All of the wiring was replaced, made computer capable. All of the phone system was replaced to handle office lines and Internet service. Parking area, lighting, security measures, shelves, painting, floor refinishing, plumbing etc.–most of the money went for office-related purposes, not aesthetics. Had she bought it for a residence, no money would have been needed. Read more »
Real Estate: Let us now appraise appraisers and appraisals
February 7, 2008 by Curtis Seltzer · Leave a Comment
Appraisers are being punched up in the courts and the press for not always providing honest real-estate valuations.
What’s going on? What exactly do appraisers do?
An appraiser forms an opinion of a property’s current Fair Market Value (FMV) by judging its attributes in relation to recent selling prices of nearby comparable properties. Adjustments are made for differences between the target and the “comps” to arrive at a dollar valuation for the target.
Appraisers get into the buy-sell process during escrow, after the buyer and seller have agreed on price and terms. If the buyer wants a mortgage from an institutional lender, he should have a financing contingency in his contract that allows him to back out of the deal if acceptable financing cannot be arranged. Read more »
