functional obsolescence
123) Curable Driveway
08/21/07
Hi Henry,
I am appraising a single family dwelling in a rural area of SE Georgia. The subject was originally purchased for the parsonage of a church, which is located right in front of the church with the only driveway access, at this time, being through the church parking lot.
My question is : does this create curable functional obsolescence, as the dirt driveway could possibly be changed to the back of the house? This is a foreclosure property, so would this just be included in the cost of recommended repairs?
Thanks,
Karen Griffin karengriffin80@bellsouth.net
Dear Karen,
From what you say it sounds like you think there is some loss of value caused by the current driveway situation and that it can be cured at a cost that is less than the additional value that will be created after it is cured.
The problem is that what you describe does not meet the definition of either functional or external obsolescence. You should just describe what you have observed, and what effect, if any, you think it has on the value, as well as if you think fixing the problem makes economic sense.
H2
I am appraising a single family dwelling in a rural area of SE Georgia. The subject was originally purchased for the parsonage of a church, which is located right in front of the church with the only driveway access, at this time, being through the church parking lot.
My question is : does this create curable functional obsolescence, as the dirt driveway could possibly be changed to the back of the house? This is a foreclosure property, so would this just be included in the cost of recommended repairs?
Thanks,
Karen Griffin karengriffin80@bellsouth.net
Dear Karen,
From what you say it sounds like you think there is some loss of value caused by the current driveway situation and that it can be cured at a cost that is less than the additional value that will be created after it is cured.
The problem is that what you describe does not meet the definition of either functional or external obsolescence. You should just describe what you have observed, and what effect, if any, you think it has on the value, as well as if you think fixing the problem makes economic sense.
H2
15) 50 Year Old House
12/08/06
Dear Mr. Harrison,
I am appraising a house that is 50 years old. While it has been maintained, it has not been updated in 50 years. The kitchen, baths and decor all need work. My client (a lender) says that as long as the condition does not affect the livability, soundness or structural integrity of the property, then it should be classified as "average." They are not asking me to push the value or not make adjustments that should be made. But they obviously are concerned that a below average comment will red flag this appraisal and will affect the outcome of the loan process. How would you handle this situation?
R. Miller cmiller@zoomtown.com
Dear Friend:
I would "tell it like it is."
In describing the subject's physical condition, you should point out that due to its age and lack of updating, this 50 year old house suffers from functional obsolescence. Unless the house has substantial historic value in its current condition to offset this obsolescence, it will negatively affect the market value.
I think your comment could be just what you wrote: "The structure, while in good repair and well kept, is 50 years old. The kitchen and bathrooms are outdated, and suffer from functional obsolescence. The decor is also dated. The highest and best use of this property would be to renovate and rehabilitate it with updating and upgrading to current standards."
H2
I am appraising a house that is 50 years old. While it has been maintained, it has not been updated in 50 years. The kitchen, baths and decor all need work. My client (a lender) says that as long as the condition does not affect the livability, soundness or structural integrity of the property, then it should be classified as "average." They are not asking me to push the value or not make adjustments that should be made. But they obviously are concerned that a below average comment will red flag this appraisal and will affect the outcome of the loan process. How would you handle this situation?
R. Miller cmiller@zoomtown.com
Dear Friend:
I would "tell it like it is."
In describing the subject's physical condition, you should point out that due to its age and lack of updating, this 50 year old house suffers from functional obsolescence. Unless the house has substantial historic value in its current condition to offset this obsolescence, it will negatively affect the market value.
I think your comment could be just what you wrote: "The structure, while in good repair and well kept, is 50 years old. The kitchen and bathrooms are outdated, and suffer from functional obsolescence. The decor is also dated. The highest and best use of this property would be to renovate and rehabilitate it with updating and upgrading to current standards."
H2