Want to know how we figure out what an unusual home is worth?
This post is all about tips on how to find comparable sales for unique property appraisal that every homeowner and realtor should know.
Unique property appraisal is a specialty of it’s own and can be confusing to anyone who is not valuing unusual homes every day.
Whether you are a homeowner or realtor, this post will help you understand what the appraiser is looking for when determining the opinion of value for a unique property appraisal report.
Once you have learned the secret to our research you will be extra prepared when meeting the real estate appraiser!
This post is all about tips on how to find comparable sales for unique property appraisal that every homeowner and realtor should know.
Unique Property Appraisal is Our Jam!
In 2018 I was involved in a horrific bicycle accident that left me unable to work for 8 months because I lost use of my entire right arm – from fingertips to shoulder…. Yes – I am right-handed.
But, I was able to research left-handed 😉
And, I knew that once I was able to drive, measure, take notes and type again, it would be very difficult to rebuild a lender business after being out of work for so long.
So, I thought….. what can I do to stand out…. and find new (good) clients?
I discovered that a majority of appraisers were turning down assignments that would be considered complex or unique home valuations.
This is because there was plenty of “easy” property appraisals available and the unique properties took a lot more time, effort, and education to complete these valuations accurately.
With plenty of downtime, I decided to enroll in as many online classes as possible to learn how to complete the unique property appraisal in a way that eventually made me the go-to appraiser for several banks in the Philadelphia market area.
2019 was a slow year of rebuilding the appraisal business, and things were beginning to look up…. then….. 2020 hit us like a freight train- and the real estate world went bonkers!
With the education and experience that I gained in determining market values for unique homes combined with historically low interest rates…. soon I had so much work that I was able to partner up with my associate Bev.
Together, Bev and I have tackled appraisals for unique properties that other appraisers would not even attempt.
Appraising these unique homes has been a blast – the homes we have seen are incredible!
In 2020, we expanded from the mortgage world into the private world of estate planning, divorce, inheritance, tax appeal and private sales of complex and unique home appraisals.
My favorite part about the real estate industry is there is always something new to learn and master.
I’m excited to share with you some tips about how to find comparable sales for unique property appraisal that every homeowner and realtor should know!
Unique Property Appraisal: Where to Begin
We begin with the theory of substitution – if this property were not available then, which property would be the most reasonable substitute for the typical buyer?
In order to do that we need to get inside a typical buyer’s head.
What is most important to this buyer?
What attributes about the house, land, neighborhood is this buyer most focused upon?
Let’s be very clear – we are NOT looking to see which people live in the neighborhood. That has absolutely NOTHING to do with real property appraisal.
We are looking at the physical attributes of the house, it’s proximity to certain amenities, it’s legal use, etc……..it’s all about the property.
I will break down 3 unique scenarios which we have encountered in the Philadelphia Metro housing market area and how we were able to determine a reliable opinion of value.
Get ready to think outside of the box!
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Equestrian Property
Picture this:
A newer custom built high-quality single-family home that is situated upon land which is located in two townships within one county and has a street address of the adjacent county.
Did your head explode yet?
But wait, there’s more!
There is also an adorable second house on the property which is 300ish years old and has been kept in very good condition.
And, a brand new 6 stall horse barn.
Plus, you can ride your horse directly from the property into the nearby public horse trail which goes on for miles.
In order to figure where to look for comparable sales we have to ask questions.
For this unique property appraisal I began with asking the homeowners: “What made you buy this property?”
After some conversation and more research I determined the most important factors for comparable sales were properties with these attributes:
- within convenient access to horse trails
- a barn for horses (but not for commercial use)
- acceptable travel distance to Center City Philadelphia and Philadelphia International Airport.
- custom-built high quality improvements
- have separate guest quarters that could also be legally rented
- privacy
Here’s what didn’t matter so much and it might surprise you:
- township/county
- school district
- size of lot (within reason)
- size of house (within reason)
Yes, adjustments were applied for the differences.
And all of the adjustments were applied according to supported analysis of market reaction.
How many phone calls did I make? Too many to count!
Historical Property
In the Philadelphia market area we have so many beautiful historical homes.
Some of these homes have restrictions because they are located on a Historic Register which may impose certain limitations when updates or improvements are required.
And some of these homes attract a lot of attention. For example, Elfreths Alley which is one of the oldest streets in America.
The typical buyer for a property located in Elfreths Alley would confirm the main reason for purchasing a property on this block would be due to its historical significance.
Therefore, when we are looking for comparable sales for a property such as this – we need to find homes that have a similar historical attraction with similar restrictions.
Attributes we look for in comparables:
- historical significance
- limitations / restrictions
- age of the property
- quality and condition of the property
Act 319 & Conservancy
Clean and Green is a preferential tax assessment program, that bases property taxes on use values rather than fair market values.
This usually results in restrictions placed upon the land and a tax savings for landowners.
The Pennsylvania General Assembly enacted the program in 1974 as a tool to encourage protection of the Commonwealth’s valuable farmland, forestland and open spaces.
Currently, more than 9.3 million acres are enrolled statewide.
More information regarding Act 319 can be found here.
The typical buyer would confirm a main reason for purchasing an Act 319 property would be due to it’s perceived advantage of maintaining the original integrity of the surrounding area and tax advantages.
There are also many conservancies in the Philadelphia Metro Area.
The Brandywine Conservancy is probably one of the most well known. (And so beautiful)
The Brandywine Conservancy protects and conserves the land, water, natural, and cultural resources of the Brandywine-Christina watershed.
This conservancy limits land use regarding pervious versus impervious.
Also, a representative from the conservancy walks the property once a year to ensure proper use.
Similar to an Act 319, the typical buyer’s perceived advantage of maintaining the original integrity of the surrounding area is where we focus when looking for comparable sales.
Therefore, finding comparable sales for a unique property appraisal of this type focuses on the land restrictions and tax advantages.
Here’s what I am searching for in comparable sales:
- size of the lot (Act 319 begins at 10 acres)
- land restrictions
- location
- view
Yes, the house matters. But the land is the priority for the typical buyer.
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So Many More Unique Property Appraisals!
I could write an entire book just based upon the different types of unique property appraisals that I have completed over the years— but I will spare you!
Here’s a helpful tip that may surprise you:
When looking for comparable sales for unique properties I don’t care when the comparable sold or how far away it is located as long as it is the most recent sale and the most similar location as the property I am appraising.
Our office has used comparable sales that sold 10+ years ago or located more than 30 miles away because they were the most reasonable substitutes.
Yes, Fannie Mae will accept these extended search perimeters.
Here is a list off of the top of my head of the different complex appraisal reports I have completed where we needed to think way outside of the box:
Log homes.
House with a water wheel.
Converted barn is now a house.
House with a stream running through it.
1700’s school house is now a single family home.
Custom-built, ultra-modern, high-tech, energy-efficient.
Houses built in the 1700’s with original walk-in fireplaces.
Brand new homes custom built with materials that were 300 years old.
Backs up to a private airport and the runway is incredibly close to the house.
Properties with pizza ovens, indoor pools, custom doggy quarters, indoor pro basketball courts, indoor pro half pipe.
Homes with secret passageways.
Properties impacted by a Superfund Site.
Railroad tracks running through the backyard.
Properties with a gorgeous view of the Delaware River.
Homes within close distance to a radio tower, high tension, weather tower.
Brand new custom home built with materials that were flown in from all over the world.
Lots and Lots and Lots of Legal / NonConforming Homes – if you live in Philadelphia then you may live in one and not even realize it.
The list goes on……………………………………………..
And, there are also plenty of unique homes that I haven’t appraised……YET.
But, what is most important is this:
When finding comparable sales for unique property appraisal and applying the adjustments for the differences we must:
- be creative and think outside of the box
- but also, use common sense and sound judgment
- most importantly, be able to clearly explain the process and support our opinion so that our Client understands our reasoning.
I hope this was helpful! Questions?
This post is all about tips on how to find comparable sales for unique property appraisal that every homeowner and realtor should know.
