13. You are appraising a single family residence located in the Huntington neighborhood at 4632 NW 56th Drive. The property is being acquired by a morteage applicant and you have been asked to appraise the property by the lender. Seven potential comparable sales were initially identified. Howeverthree of these seven were highly similar to the subject property in their transactional, plysical, and locational characteristics. You therefore decided to exclude the other four transactions from the comparable set. The elements of comparison you used to compare and adjust the sale prices of the comparable properties are listed in the market data grid below. The property rights being conveyed in the acquisition of the subject property are fee-simple absolute. Conventional mortgage financing will be used by the purchaser and the acquisition appears to be an arm s-length transaction. Thus, no adjustments need to be made to the sale prices of the comparable properties for the type of property rights conveyed, financing terms, or conditions of sale. However, the buyer of comparable 2 was aware that she would have to replace one of the air-conditioning units immediately after acquiring the property (which she did); thus, she was able to negotiate a $3,000 price reduction from the seller. Elements of Comparison Subject Comp Sale 1 Comp Sale 2 Comp Sale 3 3 $499.000 $ S510,000 $525.000 Fee simple Same Same Same Conventional Same Same Same Arm's length Same Same Same None $3,000 None Today 3 mos. ago: add 2% total 6 mos. ago: add 4% total 6 mos. ago: add 4% total Huntington Huntington Kensington Millhoper 6,662 sq.ft 6.800 sq.ft Sale price of comparable Transaction characteristics Property rights conveyed Financing terms Conditions of sale Expenditures immed, after purchase Market conditions Property characteristics Location Physical characteristics: Site/lot size Construction quality Condition Effective age Living area Number of baths Garage Spaces Porch, patio, deck Fence, pool, etc. Economics characteristics Use Nonrealty components 6.700 sq.ft Typical Average 6.600 sq.ft Typical Typical Average Average Typical Average 8 years 3.985 sq.ft 7 years 5.5 years 3.473 sq. 10 years 3.835 sq. ft. 3,920 sq.m 3.0 baths 3.0 baths 3.5 baths 2 car 2.0 baths I car 2 car 2 car Cov, porch/wood deck None Cov. porch Cov, porch Cov, porch Pool None Pool NA NA NA Same NA Same Same Single family None None None None Comparable I sold three months ago, while comparables 2 and 3 sold six months ago. Based on your knowledge of recent price appreciation in this market, you have decided that comparable I would sell for 2 percent more if sold today and that comparables 2 and 3 would sell for 4 percent more if sold today. The subject property is located in Huntington, as is comparable 1. However, comparables 2 and 3 are located in Kensington and Millhoper, respectively. Although Huntington is a high end neighborhood, both Kensington and Millhoper are generally considered to be slightly more desirable. In fact, homes in these two neighborhoods generally sell for about a 3 percent price premium relative to similar homes in Huntington. In these neighborhoods, an incremental square foot of lot size or living area is worth about $20 per square foot and S80 per square foot, respectively. Each year of effective age reduces the value of properties in this market by about $3.000 per year. Your experience suggests that each additional half-bath is worth $500: each additional full bath $1,000. Additional garage spaces, wood decks, and pools in these neighborhoods are worth $5,000 $1,000. and $12.000, respectively. No significant nonrealty items were included in the comparable transactions. Based on the above discussion of the elements of comparison, complete an adjustment grid for the three comparable properties. What is the final adjusted sale price for comparables 1, 2 and 3? Page 190
