Well, it has been a while since I last posted on the Hohman Appraisal Blog. The Christmas and New Year holidays and a Caribbean cruise vacation have kept me busy. Yes, some of us appraisers have a life outside of the real estate biz. But today, I am back in the saddle again.
Recently, I had an interesting appraisal assignment in Winter Haven. The current owners purchased a up and down duplex in the spring of 2015. This is an older home that was a single family residence when constructed but had been converted to a duplex some years ago. Since their purchase, the owners have invested a substantial sum, according to the listing agent, to upgrade and renovated the structure - refinishing the hardwood floors, updating the kitchens and bathrooms and painting the interior and exterior. However, it was still a duplex, having only outside access to the second floor unit.
My appraisal assignment was to appraise the property as a single family residence which was not possible as the outside only access to the second floor unit made this property a duplex. I discussed the situation with the listing agent who was present for the inspection. Once I was in my office, I called the lender to let her know about the situation.
Several days later the lender called and asked that I appraise the property as a duplex. Once the appraisal fee question was resolved, I proceeded with a revised sale search which provided market data much below the sale price. Because the buyers were applying for a VA loan, I was required to notify the lender that the value was not going to meet the contract price and ask that she or parties with an interest in the transaction provide sales that they believe would support a value equal to or greater than the contract price. There were no duplex sales provided by the interested parties to support the sale price because none existed.
Once I returned from vacation, I learned that the assignment has been canceled because the duplex use of the property would not support the sale price. Another interesting point about this is that sales were available for the single family residential use which would have supported the sale price. In order to convert the property to a single family use, the owner needed to cut an opening in a first floor living room wall which would have allowed access to the interior staircase and the second floor. The cost would have been $1,000 or less. Why this did not happen, I can't explain.