Secret Real Estate Wisdom - Posted by JPiper
Posted by JPiper on June 09, 1999 at 11:40:34:
Here’s one of your statements?. “Age, architecture, site size, site dimensions, solar orientation, bldg. additions, street crossings, school sites, school buildings, parkland, shopping, landscaping, swimming pools are variables that must be factored into the mix.”
I was particularly struck by SOLAR ORIENTATION, a little known but vastly important appraisal technique. Few realize how far out of whack the sun can get just one street over, and a proper adjustment MUST be made to account for a “low laying” sun on one street versus a “high” sun on another. One should ALWAYS take care to make their evaluation on a sunny day, so that proper observation of the sun may take place. Thanks Karl for revealing this important piece of secret real estate wisdom.
Of course I am wondering just how solar orientation fits into the cost approach. I suppose I’ll just ask my builder.
As far as the income approach goes as it applies to single family homes, this is more BUNK?.and of course fails to account for solar orientation, a major flaw. By far and away the VAST majority of single family homes are bought and sold by people who are going to live in them?.NOT rent them. Therefore the value of a single family home has little to do with it’s rental value?.unlike apartment buildings, shopping centers, etc. Obviously if YOUR idea is to rent houses out, you should pencil the numbers out to see if that will be a profitable activity. But this has NOTHING to do with the value of the property for a homeowner?.the VAST majority of the buyers of single family homes. It only determines whether the value of the home would be a profitable rental property for you Karl.
You say “The determination of Fair Market Value of residential housing using comparable housing sales in most locales of this country is difficult if not impossible to accurately calculate.” Karl, I’ve been doing just that for about 19 years at this point, in order to establish a beginning point to determine my offering price. It’s worked amazingly well Karl?..although it isn’t rocket science, and therefore it isn’t precise like you might like it to be. My guess is that it’s you Karl that has difficulty with this method. NOT ONE investor that I know uses ANY method to determine value other than COMPARABLE SALES for single family homes, other than YOU Karl.
My suggestion to you Karl is to get out in the field, take a look at some properties, it’s easier than you think. Quit trying to come up with numerical methods to establish value. And Karl, PLEASE send me YOUR method for evaluating SOLAR ORIENTATION.