How to Identify a Complex Residential Property
By Dan Bradley
Excerpts: A complex one-to-four family residential property is defined as a property that meets at least one of the following criteria:
- The property to be appraised is atypical
- The form of ownership is atypical
- The market conditions are atypical
Some of the key physical features that can make an appraisal assignment complex include:
- Size (significantly larger or smaller than typical for market)
- Floor plan (there may be functional obsolescence)
- Unique custom features
- Quality of workmanship or construction (higher or lower than the norm)
- Architectural design
- Adequacy of HVAC, electrical systems, well and/or septic
- Additional living unit(s)
- Non-conforming zoning
- Mixed-use property (for example, it is used as both a business and residence)
- Waterfront properties
Keep in mind that what is considered a complex residential property in one market might not be considered complex in another market. For example:
- A mansion in Beverly Hills is not atypical; a mansion located somewhere in rural America might be
- A log cabin in the mountains of Virginia is common; a beach-front log cabin in VA, not so much
- Manufactured or mobile homes with additions are common in rural areas, but generally not in cities
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My comments: Read this short article and keep it available. Very good lists of the factors.
Why do you want to know about this topic? Business is slow now, which is a good time to try appraising unusual homes. But, a fast turn time is not a good idea unless you are very familiar with the subject’s complexities. Do you have another appraiser who can help you? Don’t risk your appraisal license by getting in “over your head”. I get regular calls from appraisers who said “yes” but did not have anyone to advise them.
Very few appraisers, if any, would have experience on all these types of properties. For example, I have appraised many life estates, but no homes with a leasehold (ground lease) in a market area where such interests are uncommon. I have only appraised homes where the subject and all the nearby homes are leaseholds. I get advice for appraising it.
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NOTE: Please scroll down to read the other topics in this long blog post overpriced homes, appraising 3,000 years ago, AMCs good bad ugly, unusual homes, mortgage origination stats, etc