Duplex Appraisal - Comps?

Question

I am in the process of having a duplex refinanced in Ft. Wayne, IN.  When I look online I see nearby duplexes that have sold at a price that would substantiate my value in the $180k-$200k range.  However, those duplexes were split into 2 separate condos and sold individually for $95k-$100k each.  I spoke to an appraiser and he said these are not eligible for use as comparable sales.  Is this true?  If not can you point me towards some official information that I can give to my appraiser?

Chad Trail · Answer

@Michael Seeker These "condos" are exactly the same structure as mine.  The only difference is that they have 2 parcel numbers and mine has 1.  How can anyone justify these are not comparable in value if no onsite inspection could discern a difference in the 2 properties?

Should I look at separating mine into 2 parcels?  I noticed my neighbor duplex did this and pays a higher property tax than me despite being exact same floor plan, age, and builder as mine.

NA Beard The appraiser I spoke to was the appraiser the bank assigned.  We were trying to coordinate a time to let him on the property.

Michael Seeker · Answer

Looks like you pointed out one significant difference between what you own and what you're hoping to comp it against.  That is a very legitimate reason for differing values even if it is the exact same layout/builder.  Condo's are individual units which require costs to convert and are generally not owned by the one person (though they can be).  If you turn your building into 2 condo's, then the comps you mention might be able to be utilized.  As-is you are trying to compare a duplex to 2 condo's which is in no way a reasonable comparison.

Just go down to your corner gas station and put 12 individual coke cans on the counter and a 12-pack and see how much of a price difference there is.  One could argue they are exactly the same...but the fact is they are not due to packaging, overhead, transaction costs, etc.

Jeff B. · Answer

You can try comps and appraisals, but the bank will demand to get their own, so don't go crazy on the problem.  Dup's, Tri's & Quad's will run appraisals just like a SFR, but a 5+ mfu will be a commercial evaluation and these get real expensive.

Michael Seeker · Answer

@Chad Trail - I would agree with your appraiser.  2 condo units are not really comparable to a duplex.  When doing an appraisal on 1-4 units, the appraiser will look for properties of similar unit mix, construction and square footage.  When you split a building into condos, they are treated as separate units which will likely have the same type of construction but unit mix and square footage should be vastly different, making them not comparable.

If no multifamily sales exist, then the next best thing will be a single family of similar construction and square footage.  Comparing condos to a duplex is comparing apples and oranges...I don't think you'll find anything to make the appraiser think otherwise.