Pros and Cons of Complex Property Appraisal: Insights from a Florida Appraiser

Professional appraiser holding a plus sign in one hand and a minus sign in the other

In my previous blog post, I observed that specializing in complex property appraisal can be very profitable for the residential appraiser—in Florida and all across the U.S. Here, I’ll talk about the advantages and disadvantages of “complex” and “challenging” assignments and how to find this type of work. In addition, I’ll present several examples to help you identify complex assignments.

What is a complex assignment?

The complex assignment is one in which the property to be appraised, the form of ownership, or market conditions are atypical. Let’s look at these categories individually.

Atypical property features

Examples could include, but are certainly not limited to:

  • Most assignments related to bodies of water
  • View amenity properties
  • Golf courses, mountains, resort areas
  • Houses in rural and small-town areas
  • Many gated communities
  • Luxury homes
  • Historic properties and/or neighborhoods
  • One-of-a-kind properties (no comps)
  • Non-conforming or illegal use
  • Significantly damaged improvements
  • Design (dome, log, etc.)
  • Unusual site (size, shape, terrain, setbacks, easements, deed restrictions, etc.)
  • Functional obsolescence
  • Zoning (highest & best use, grandfathering, etc.)
  • Near a significant negative external influence (railroad tracks, highway, commercial, industrial, landfill, subsidence)
  • Flood zone issues
  • Environmental issues

Form of ownership

Examples could include, but again are not limited to:

  • Leasehold
  • Ground lease
  • Life estates
  • Partial interests

Market conditions

Again, examples could include, but are not limited to:

  • Declining market
  • Appreciating market
  • Pandemic
  • Environmental contamination
  • Major employer closing down
  • Transitional area
  • Few comparable sales in the area

Interested in complex property appraisal? Experienced and novice appraisers alike will enjoy our CE course: Complex Properties: The Odd Side of Appraisal.

Pros: What’s good about taking on complex assignments?

The best thing about complex property appraisal assignments is the higher fees, but there are other benefits that make them advantageous.

They are usually more interesting and a refreshing break from the normal routine. I’ve always been intrigued by the unusual assignments. Tract housing subdivisions become boring after a while. I will never forget the time I had to do several dozen condos in the same complex; I was ready for a dome home about a third of the way through.

Finally, complex assignments often give an appraiser a chance to expand their knowledge and skills, which can lead to more business and even new clients.

Cons: What’s bad about taking on complex assignments?

These assignments generally take more work and therefore more time to complete, which can cause conflicts with office routine. Sometimes they require additional visits to the subject property or searching additional resources not normally available; you may set the fee too low before realizing just how complex the assignment is (such as the rural or historic examples listed above).

Competency can also become an issue. You may find that the assignment is outside your competency level, requiring you to take the necessary steps to become competent, or you may have to withdraw from the assignment.

And finally, since these assignments don’t fit the norm, you may find that you have more after-the-fact questions from the lender/client.

How do you find work in this specialty?

Here are several tactics that will help you find complex property appraisal assignments:

  • Solicit business from new clients, marketing your interest in the unusual.
  • Market to non-lender clients.
  • Take additional education courses to expand your knowledge.
  • Gain additional certifications, such as McKissock’s Certified Luxury Home Appraiser™.
  • Do a thorough job on the assignments that you get, and more will likely come to you.

My personal experience

To expand my client base back in the 1980s, I contacted every potential client I could think of and offered my services for the “tough ones” (was what I called them). I soon began receiving orders for things like:

  • A house on a half-acre island
  • A luxury waterfront home on 6 acres, but 5 were under water even at low tide
  • Weird structures galore
  • A house still on septic in the middle of St. Petersburg, Florida
  • An abandoned, partially finished new construction in a remote wooded area, that four appraisers had backed out on because of the large number of rattlesnakes on the property. Armed with shin guards, a pistol with snake shot, and a walkie-talkie to communicate with an assistant waiting back along the road in my van, I completed the assignment and got triple my regular fee plus reimbursement for special equipment. The weeds and brush were waist high, and as for the rattlesnakes…I saw four and heard more.

More examples of complex property appraisal assignments

Last month’s blog post addressed water body related assignments. Let’s look at a few specific examples:

  • Waterfront – What kind of water? How deep? What if the subject’s property does not go all the way to the water?
  • Water view – Certainly water views vary significantly from a stream in the backyard to open ocean view. What about the permanence of that view? Example: This was a classroom field trip to a student’s own home. The subject was across the street from waterfront homes. It was a two-story home, with living room, dining, and kitchen on the second floor to take advantage of a fantastic mile-long water view over the roofs of the two one-story waterfront homes across the street. The bedrooms were on the first floor. Both one-story houses across the street had “For Sale” signs in the front yard, and every sale in the neighborhood for the past two years had been sold to builders who tore down the one-story home to build two-story homes that in this case would totally block the subject’s water view. What’s a 6-month water view worth? Complex assignment…absolutely!
  • Bridge locked – Question: do people with more money usually buy more expensive houses? And do those same people generally buy bigger boats than most folks? Well then, would low clearance bridges in residential developments that restrict the size of boats that can pass under to access open water of lakes and bays impact what two identical houses might sell for if one is bridge locked, and the other has open access to the open water? Complex assignment…absolutely.
  • Navigability – A large waterfront development of finger canals. Water depth varied drastically. Some could accommodate very large boats, and others maybe a 16 ft runabout at high tide only.

All of the above demonstrate “the property to be appraised…is atypical” and are complex assignments.

In the next blog post, we’ll look at a few more examples of complex appraisal assignments, and discuss how we might tackle some of these using nonstandard techniques such as going further away or back in time, bonus or discount value, contingent valuation method, relative ranking, and more.

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Written by Steven W. Vehmeier. Steve resides in Florida where he is a state-certified general real estate appraiser, holds a general appraiser instructor permit, and is a licensed real estate broker. He has taught appraisal qualifying and continuing education courses for multiple colleges, professional appraisal organizations, his own school, and McKissock Learning since the mid-90’s, often spending over 100 days a year traveling and teaching. He has authored dozens of appraisal courses and textbooks, including several for McKissock, and has been a member or affiliate of eight national appraisal organizations, and national director of two.

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