Chapter 17 Airspace condominium Attached housing Compensable damage Condemnation Condemnee Condemnor Conditions Covenants and Restrictions CCampRs Condominium Cooperative Fixtures ID: 329684
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APPRAISING SPECIAL OWNERSHIPS AND INTERESTS
Chapter
17Slide2
Airspace condominiumAttached housingCompensable damageCondemnationCondemneeCondemnorConditions, Covenants, andRestrictions (CC&Rs)Condominium
CooperativeFixturesHomeowners’ associationJust compensationLarger parcel
Leased feeLeaseholdManufactured home2CHAPTER TERMS AND CONCEPTSSlide3
Master mortgageMobile homeModular homesPartial interestsPartial takingParty wallPatio home
Prefabricated homesRemainder parcelRow houseSeverance damageTake parcel
Time-share ownershipZero-lot-line home3CHAPTER TERMS AND CONCEPTSSlide4
LEARNING OUTCOMESList at least four less-common types of homes, define each,
and explain what special problems each presents to the appraiser.Define
several commonly marketed types of partial interests.Explain three ways in which the appraisal process is different for eminent domain appraisals.4Slide5
TYPES OF OWNERSHIPCondominiumsOwnership:Airspace + Interest in common areaRestrictions: CC & Rs
Appraisals:Emphasize sales comparison approachCompare amenities with competing projects
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TYPES OF OWNERSHIPPlanned Unit Developments (PUDs)Zoning concept allows subdivision design flexibilityOwnership is the fee interest + shared interest in the common areasTownhouse styling is common
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TYPES OF OWNERSHIPCooperativesOwnershipPercentage of cooperative associationRight to occupy specific unit
Right to use of common areasAmenities similar to condominiumsAppraisalsConsider available financing
Consider what transfers in a saleConsider Market acceptance7Slide8
OTHER HOUSING DESIGNRow HousesLocated on individual lots
Lack side yardsUsually owned in feeProblems involve lack of privacy, fire
protection8Slide9
OTHER HOUSING DESIGNTownhousesSimilar to the row house in lack of side yards
Townhouse name applies to the building styleOwnership is the fee interest plus shared interest in any common areas
Homeowner’s associations are usually involvedLegally similar to the planned unit development9Slide10
OTHER HOUSING DESIGNZero Lot Line (Patio) HomesSmall lots; house lacks conventional side yards
Patio often abuts wall of the house next doorLack of privacy may pose problems
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VARYING THE TYPE OF CONSTRUCTIONManufactured HomesHUD classification of mobile homes built after 1976Built to meet Federal Manufactured Construction and Safety Standards
Structure and property must meet strict standards to qualify for FHA loans
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VARYING THE TYPE OF CONSTRUCTIONModular and Prefabricated HomesBoth are forms of factory built housingModular homes resemble mobile homes but without running gear
Prefabricated components are now commonplace in conventional construction
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PARTIAL INTERESTSInterests Created by LeasesLeased FeeLeaseholdSub-leasehold
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PARTIAL INTERESTSOther Partial InterestsLife EstatesUndivided Interests
Mortgaged PropertiesTimesharesEasements
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PARTIAL INTERESTSDefining Leased InterestsLeased Fee = The owner’s interest in the propertyLeasehold = The tenant’s interest in the property
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TYPES OF LEASESTypes of LeasesFlat/Straight leaseStep-Up leasePercentage leaseResponsibility for Expenses
Gross Lease = The landlord pays all expensesNet Lease = the tenant pays all expensesVariations = Responsibility is often divided
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VALUING THE LEASEHOLDValuing the LeaseholdEstimate the Tenant’s favorable rentDefined as market rent less contract rentConsider the terms of the lease
Apply annuity or yield CapitalizationUse a financial calculatorCapitalize for the term of the leaseArrive at a
market value opinion17Slide18
VALUING THE LEASED FEEValuing the Leased Fee (Method #1)Estimate the annual net operating income
Apply annuity or yield capitalizationUse a financial calculatorCapitalize for the term of the lease
Add the discounted reversion (Value at the end of the lease ) using a calculator18Slide19
VALUING THE LEASED FEEValuing the Leased Fee (Method #2)Appraise the Undivided Fee conventionally
Subtract the value of the leasehold estateThe result is the value of the leased fee
Not always a valid method19Slide20
EMINENT DOMAIN TERMINOLOGYEminent DomainThe government’s right to take private property with “just compensation”
CondemnationThe court action under eminent domainCondemnor
The agency acquiring the propertyCondemneeThe property ownerPartial TakingThe part taken out of a larger parcelRemainder ParcelThe part the owner will get to keep20Slide21
EMINENT DOMAIN TERMINOLOGYThe Larger ParcelThe economic unit from which the “Take” parcel is a part
Severance DamageThe loss in value to the remainder parcel due to the take
Compensable DamageLegally compensable value lossBenefitsGeneral – those shared by the community at largeSpecial - those affecting only the remainder parcelJust CompensationGenerally 1) the market value of the “Take” parcel plus, 2) the market value damage to the remainder parcel21Slide22
SUMMARY22
Appraisers
are faced with a growing variety of appraisal assignments. Many of these assignments now involve unusual concepts in ownership, design, and construction. A common appraisal situation involves estimating the market value of the lessor’s and/or lessee’s interests in a given property. One of the most specialized areas of appraisal practice involves valuing property for eminent domain. eminent domain often involves acquisition of only a portion of the property, called a partial take. Here, the appraiser must consider the concepts of the larger parcel, the remainder parcel, severance damages, and general and special benefits, in order to reach a final value conclusion.