An agent in our office recently asked me how I would value a Blacksburg condo that’s in a complex called Clay Court. Clay Court is in a nice, downtown location of Blacksburg, but it’s tough to value when we haven’t seen any public sales since 2007. I’ve written about Blacksburg condos in the last year, but this complex is a little different. It’s not a building with a lot of students (hardly any, in fact), the starting price points are above the median sales price of the market in Blacksburg, and there are relatively few (~ 30) units in the entire place. It’s not surprising that we’ve seen very few sales since it was built, but it’s still tough to assign a value.
When doing a valuation on a property, it’s like taking apples and oranges and trying to make them all apples (or oranges – take your pick). Property A, our subject property, might have a heat pump, a new roof and hardwood floors, while Properties B & C (our comparable properties) might have electric baseboard heat and carpet. What I want to do is determine, with relative certainty, how much value to add or subtract from Properties B & C in order to get them as close in features to Property A as possible. If Property B is superior to Property A in a particular feature I subtract value from Property B’s sold price, and if Property C is inferior in a feature to Property A then I add value to Property C’s sold price. There’s no standard multiplier for any one feature, and it’s an inexact “science”, but along with a number of other factors and projections it can help me ascertain (I just wanted to use that word) a competitive sales price for a property.
But honestly, I had no good idea how to value this one. I suggested a blindfold and a dart board, but that seemed a little reckless – so I called Leslie Frantz. As you might recall, Leslie sat down and discussed a changing marketplace, and she and I have spent a lot of time valuing properties together. She’s been a trainer of sorts for me on this kind of thing, and so we asked her how she’d look at Clay Court given the fact that there’s only one property on the market there, and no sales in over two years.
Leslie said that in a situation like this, with very few comparable sales, as an appraiser she’d have to look at similar buildings. In this case, Kent Square is a block away and also has condos for sale, but no recent sales. If that’s the case – if a property just doesn’t have any sales to compare it to – her suggestion was to look at the active listings and see what they’re listed for, and how long they’ve been on the market because that’s the competition. It’s not the best solution in the world since we’d love to have recent sales on which to base the adjustments, but in a case like this it’s all we had.