Cohousing-L Mailing List: Appraisals/common house mortgages

[David Mandel (dlmandel]

Denise (I think) wrote:

>> when appraisers appraise condos,
>they add very little value for the common facilities.<
>

and then Thomas wondered:

>        I wonder if this works for tax appraisals too.  I wonder where the
>trade off is between a low tax assessment and a high appraisal for resale.

In our experience here, anyway, tax assessors assume that the value is what
you paid for your property and assess it accordingly. That's how we were
treated, and we recently succeeded with an appeal to have our initial
assessments lowered to the appraised values, which were lower than our
final prices (a long story of its own).

***

I'm still wondering about this business of considering a separate mortgage
for common facilities due to their low-balled value when considered part of
the condominium units. Denise indicated that one project did this. Does
anyone know which? The idea sounds intriguing but contrary to what I though
the structure of a condo is: the owner of each unit owns an undivided share
of the land and any common facilities. Who would be the owner of the common
house if it has a separate mortgage?

Also, if the reason for doing this is that "when appraisers appraise condos,
they add very little value for the common facilities," then why would a
lender and its appraiser all of a sudden consider the same common
facilities so much more valuable just because they are owned by some
separate entity that's seeking a separate mortgage? This sounds too much
like alchemy. And if the appraised value is not raised by separation, then
it won't help, because someone -- presumably the same individual unit
owners -- will still have to come up with the same large down payment.

Moreover, I question whether the typical cohousing condominium's common
facilities are so much more costly than those of many other condos which
may well have swimming pools, club houses, exercise facilities, heck, even
golf courses. Well, I could see the golf course owned by a separate entity
and having a separate loan. but the other stuff? I doubt it.

Instead of complicating your structure with a separate entity and mortgage
search that may not pan out anyway, I suggest working on your appraisers,
waxing enthusiastic about how desirable your project is and politely
badgering them for higher values if needed to help getting loans. No need
to make a big deal about how different cohousing is from other condominiums
(if condo is your structure, that is). On the contrary, lead the appraiser
to treat it as much as possible like other condo projects; the concept is
familiar to her/him.

The most important attribute is to show that you and the other buyers are
willing to pay $XX for these homes. That's what makes them as valuable as
you need them to be. And once the first couple of sales are recorded, it's
even easier for the appraiser to justify the high numbers you need for
subsequent sales. So if you can, have the first sales close be those to
buyers who can and want to make down payments on the large size anyway.
That will help the others who need larger loans obtain them by establishing
high values.

David Mandel, Southside Park, Sacramento