Challenging Appraisals: High value & Unique Homes


  High-value and unique homes present a special challenge to   appraisers  as there are often few direct comparable sales. Additional   factors like highly customized features, significant land value, and even   special legal   classifications, a historical designation for instance,   significantly affect the property’s market value. It takes a great deal of   time, skill, and experience to accurately assess the contributory value   of uncommon elements a   property might contain. At Fidelity, we have worked with center city penthouses with commanding views,

 expansive custom wine cellars, elaborate security and smart home systems, centuries-old horse farms with multiple outbuildings, and more. We have even done appraisals of a property with a private three-hole golf   course, and one unique home that was built directly into the side of a hill like a hobbit home from Lord of the Rings!

 

In all these examples, direct apples-to-apples comparisons are exceedingly difficult if not impossible. Finding, for example, another fully remodeled penthouse with a heated indoor lap pool, 360 views, and a parking system using lifts to bring the

 car to the tenant rather than the other way around is difficult enough, but finding several of them that not just exist but have recently sold is essentially impossible. 

 

These situations require experience, deep research, local market knowledge, and a bit of common sense that no algorithm will ever possess. One of the most misunderstood concepts in real estate, even among appraisers and agents, is that cost equals value when it rarely does. Value is what an average buyer will pay for something regardless of what it cost to build. A solid gold kitchen, an admittedly silly if illustrative example, will never be worth its weight in gold as it were, as it costs far more than any buyer would value the function of a kitchen. A massive greenhouse may be one owner’s dream and another’s nightmare, and a high-end heated lap pool in a suburban mansion is valuable, but the same pool on the roof of a skyscraper, though it may cost the same amount to construct, provides significantly more value. What something cost is never enough information, and though many appraisers may use cost as a short cut on challenging assignments, Fidelity appraisers know that much more is both required and expected.