As an investor or lender, you need accurate valuations of residential properties to make informed investment and lending decisions. However, you may encounter distinctive homes and buildings that present appraisal challenges due to their unconventional attributes. Here are some key considerations when assessing complex and uncommon properties:
Look Beyond Superficial Uniqueness
Some characteristics like unusual architecture may not impact value. Focus instead on features that affect utility, desirability and marketability – such as functional obsolescence, legal restrictions, environmental issues or external neighborhood factors. Identify the underlying value drivers.
Require Detailed Research and Data
Insist on more intensive research and data gathering by the appraiser. They should tap specialized sources beyond MLS listings to find comparable sales and understand the property’s distinguishing features. Subjective opinion has little place in appraising unusual homes.
Scrutinize Valuation Methods
Pay particular attention to the appraisal methods used. Standard approaches like the sales comparison method often fall short for properties lacking adequate comparables. Insist on cost analysis, income capitalization, paired sales analysis and other methods tailored to the specific property.
Demand Full Explanations
Do not accept conclusory or unsupported value opinions. Require thorough explanations of the property’s uniqueness, detailed reasoning behind adjustments and transparency into the appraiser’s data sources, comparable selection and valuation techniques.
Consider Appraisal Review
For large or highly complex appraisals, engage an experienced review appraiser to provide oversight and critique the primary appraiser’s methodology. They can spot flaws, test assumptions and correct deficiencies.
Assess Appraiser Expertise
Evaluate the appraiser’s expertise with unusual properties and unwillingness to make unsupported assumptions. They should demonstrate a capability to properly appraise distinctive properties through expanded techniques, analysis and reporting.
For appraisals of truly unique and complex residential properties in the Boston area, we at Boston Appraisal Services have in our roster, experienced and AI Designated members providing exceptional valuations.
While atypical homes present challenges, reliable valuations are possible when appraisers use solid data, tailored methods and rigorous analysis. Insist on this higher standard when unusual properties are involved to protect your investments and loans.