Recently, I appraised a vacant home pending sale in SE Portland. This is an older residence built in the 1940s. The Listing Agent had correctly advertised in the Multiple Listing Service (MLS) the finished area that the Multnomah County Assessor had identified — including a basement, main, and finished attic. However, as I walked up the stairs to the second floor I spotted, to my surprise, the UFO (Undisclosed Functional Obsolescence).
The UFO referenced here is that the second floor is only six feet at its tallest, and it slopes immediately downward from the peak. According to Principles of Residential Real Estate Appraising 2001, Functional obsolescence is a “Loss of value caused by loss of utility or poor design” (G14). Obviously, an attic, where one needs to stoop to stand in most areas would be considered functional obsolescence and is not as desirable as a similar-sized property with more typical ceiling heights (In sloped attics, ANSI requires 7 feet height in at least half of the room area to be considered GLA) on the attic level. The real problem is that this obsolescence is rarely disclosed in the MLS. I now know that my subject has the problem; but, how do I value the functional obsolescence if I cannot find another property with a similar attic due to the MLS not disclosing the issue?
In this appraisal, I got lucky and found two other comparable sales with similarly cramped attics. I found the comparables by first searching for properties with similar main and upper areas (according to the county records). I then identified the low ceiling heights by viewing attic photos and talking to the agents. However, had I not been able to find properties that matched the subject’s attic, I could have used others that lacked attics and likened those properties to structures that have more typical attics. This would have provided an estimate for the contributory value of typical attic square footage. I could have then reconciled the subject property somewhere in the middle.
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Thanks for reading,
Gary