ann arbor appraisals Archives - annarborappraisal

Ann Arbor market snapshot by price

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Although appraisers do not run search parameters for their comparable sales by price range, occasionally running market information by price can help isolate where the shortages and excesses are. Take for example, this information from 9/18/18, run between 8 – 8:30 PM through the Ann Arbor Area Board of Realtors.

This is a very quick snapshot of how many sales occurred in each price bracket shown within the Ann Arbor school district compared to what was available for sale, and those that were already reported under contract (P&C). The CTLR column refers to the contract-to-listing ratio, simply put the number of properties under contract compared to the total number listed for sale at any given time. The last column relates to how many months supply there is based on the last 12-months sales in that price bracket.

Not unsurprisingly, the lowest priced houses showed the greatest absorption into the market and the lowest supply. Up to $500,000 the market showed good absorption with over 37% of the houses on the market under contract and less than a three month supply, and over $500,000 the absorption rate drops (other than the anomaly of the $801,000-$900,000 range) and months of inventory increases.

9.18.18 price snapshot

This is good information to consider, as the narrative in the news may be that we are experiencing a severe housing shortage, but if it is broken down into a price range, what shows is a housing shortage under a certain price point, and excess inventory over that price point.

Appraising Lakes, Beyond Front Footage

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When attempting to determine the value of lakefront property, there’s so much more to the equation than just measuring waterfront space. Here’s what appraisers and agents need to know.

As summer approaches, activity on lakes—large and small—increases. But in my experience as a REALTOR® and certified appraiser, it is apparent that many agents, brokers, and appraisers have not acquired all the knowledge, skills, and perspective needed to accurately evaluate lakefront property. In the hope of filling in some of the gaps, here are some tips on how appraisers can provide a more defensible appraisal on these complex properties as well as some of the nuances that agents who are new to lake properties should consider.

The Why of the Buy

Both appraisers and agents alike need to be aware of the motivations that result in sales. Appraisers need to be in touch with the vagaries of the different submarkets in order to adequately analyze the properties they appraise, and agents need to understand that there is much more to selling lake property than front footage.

What motivates a buyer to purchase a lake property? Is it the tranquility? The beauty of the water? The excitement of a speedboat and waterskiing, or casting a line into the water in hopes of landing a trophy catch? It is all of these things, and none of these things. The motivations are almost as numerous as the buyers looking for a lake house are, and one buyer’s paradise is another’s hell. Different types of lakes attract different buyers, and the buyer looking for tranquility is going to be very unhappy purchasing a house on a lake crowded with jet skis and powerboats. The same would be true for the avid motorist who buys on a small, quiet fishing lake.

Quality Over Quantity

While some depend on how many “front feet” the property has on the water to determine value, that is not necessarily the best course. The amount of frontage usually relates to space between neighbors and how much area is available for docking and beach toys. But consider the house sitting on the edge of a bluff, with 200 feet of frontage and 100 steep steps down to the water. What if the shoreline is also rocky and reedy? Five lots south, the topography has sloped in to a gentle, almost level lot and the frontage itself is a natural sandy beach. This lot has only 50 feet at the lakefront. Which is more valuable?

The value of a lake property could be tied not only to the ease of the access and the quality of the frontage but also to the lake itself. For a clean swimming lake, the narrower 50-foot lot might be much more valuable than the less accessible 200-foot lot. But for a lake that is picturesque but not good for swimming or boating, the 200-foot lot with the elevated views might be the more valuable site. It all depends on the lake and why buyers might be interested in that particular spot.

Present and Future Demand

I live and work in Michigan, a state surrounded by lakes of all kinds. The Great Lakes are a treasure, but not exactly the bastions of privacy and quiet you see on some of the smaller inland lakes. Many of our inland lakes are massive in size, deep, and clean. Some are shallow, reedy, and mucky, making them more of a viewing amenity than anything else. Some lakes allow all the toys and others only a kayak or canoe. Some are merely ponds in buyers’ eyes.

There are many questions that buyers, real estate agents, and appraisers should consider in addition to the present appeal of the lake itself, because these issues contribute to whether the lake remains appealing into the future. Some lakes are manmade in that they are the result of damming a river. Some municipalities are considering removing such dams—in that case, what happens to the manmade lake? Some lakes have been invaded by unwelcome species such as zebra mussels, Eurasian watermilfoil, and other nuisances. Lakes with public access sites tend to have more trouble with these invasive species, though they do also travel naturally through waterfowl and other means. Could a lake with an invasive species problem become less desirable than one without? Is there any guarantee that a pristine lake will remain so? What about the life cycle of a lake? Is it a dying lake, or is it likely to stay in similar condition for the foreseeable future? How is the management on the lake? Is there an active association that seeks to ensure the health of the lake? Are septic systems monitored? Does the association have prohibitions against fertilizers?

But just as bodies of water can change, so too can our perspectives on them. Is it possible that we are starting to see a shift, as our population ages, to the desire for quiet lakes that do not allow gas motors? It used to be that these quiet “no-wake” lakes had less appeal, but in many instances, they are now attracting buyers that would not have considered them 10 or 20 years ago. There is something to be said for the quiet of a lake without loud motors and loud reveling at all hours of the day and night. On the other hand, these lakes have limitations of use, and buyers who want to have it all might find the sportier lakes desirable, in particular if there are limited year-round residents. The lack of year-round residents could mean that the owner has quieter weekdays, with increased activity on the weekends and over holidays.

The Tools at Your Disposal

The Department of Natural Resources maintains lake maps in most areas. These maps show the topography and composition of the lake bottom. DNR maps will also show public access points, existing housing, and other features. Appraisers and agents alike should become familiar with these maps. Plat maps are also available in many areas, and these can be used to examine other features, such as ownership issues where a third party may control the frontage in between a property and the lake shore. Another concern that can impact value is keyholing or funneling, where backlot owners have rights to a parcel on the water. Just being aware of some of these issues can help you be a better advocate for your client and know when to direct them toward legal counsel to help determine whether they have water rights.

Not All Sales Are Comparable

If possible, it’s best to find comparables on the same lake, but remember, lakes also have varied topography, both on shore and to the lake bottoms, and just because the potential comparable property is on the same lake might not mean that the properties are actually comparable.

Appraisers need to understand the lake itself and which lakes are reasonable alternates if nothing is available on the lake upon which we are doing our appraisal. Know your market and write about what is important to the target audience. How large is the lake? How deep is it? What types of activities are allowed on the lake? What are the other lakes that the buyer for our property would reasonably consider and why? Fully describe the topography, frontage, and access to the water at the subject site. Write about whether the beach is sandy, mucky, rocky, reedy, and so forth. Document sunrise and sunset views, parking, and docking. Agents don’t have the same communication requirements as appraisers do here, but they should be aware of what appraisers are considering and what they are reporting, because such factors affect the pricing conversation as well.

Determining logical comparable search criteria is incredibly important in lakefront homes because buyers may consider properties on lakes that are 20 or 30 miles apart, something that might scare some of the most experienced underwriters if not properly explained. A smart appraiser will set the stage ahead of time through the narrative in the report, which will help the underwriter and reviewers understand the thought process for the choice of comparables. Once the appraisers have spelled out the reasons that have drawn a buyer to the subject lake, discussion follows about the lakes that are competitive and why they are competitive. This can justify the use of sometimes very distant comparables.

Agents can help by providing appraisers with information about the lakes that the buyer considered and why they considered them as competitive. If your buyer would only consider one lake, explain why. While it might not be possible for the appraiser to stay on that lake due to lack of recent sales data, the buyer’s motivations to that lake over others can still be helpful.

Summer is coming and lake buyers will be out in force again soon. Be prepared to have a lake appraisal take longer and be costlier than a regular subdivision job. Take the extra time necessary for these lake deals to research the lake and the site, in addition to the improvements on the site. Hopefully the extra effort will pay off and you’ll be better able to enjoy your next lakeside sunset or cool dip in the water.

beyond front footage

Walking at work

It certainly would be ideal to have a magic pill that would allow one to stay in shape, at the same time as staying productive at work. The advent of the treadmill desk and its increasing popularity is making this magic pill seem a real possibility. Imagine being able to work, talk, research and type, all while walking. Sounds great doesn’t it? It is, but there are limitations. The set up can be awkward, and if you are vertically, or space challenged, there can be limitations with the workspace. If you are a bit of an overachiever, like I have a tendency to be, there can be real limitations to the physicality of the system.

I purchased my first treadmill desk in 2011 in an effort to get up off my seat and ease my aching back. Sitting was causing a whole host of physical issues, not the least of which was an increasingly widening girth and backside. I already owned a good solid treadmill from the days when I was a runner, and trained on this workhorse of a machine. The desk itself was something that could go on top of any treadmill and that was very appealing because it made the set up much less expensive than buying one of the combination treadmill desks that have gained popularity in the marketplace.

This brings me to the first limitation: space! If you have a large scale treadmill then it is not going to have a small footprint. If you are going to be using one of these beasts upwards of four or five hours (or more) per day, then it darn well better be a workhorse or the motor and/or deck and/or belt are going to wear out very quickly. So the big treadmill takes up space, and the desk itself can take up a lot of space as well. The area that contains my treadmill desk takes up eight by seven feet and this doesn’t include any of the office peripherals such as bookshelves, printers, cabinets and so forth. While you may be able to get by with a smaller workspace and treadmill, most people want to have at least two monitors at their disposal, and therefore the larger workspace may be imperative.

Another limitation to the setup is the treadmill itself. Treadmills that are for runners and exercise are not designed to do long hours at slow speeds and the motors can burn out quickly, in particular if you have something like an orthopedic belt to soften your tread. If the treadmill deck is too narrow, or two short, drift may cause you to step on the rails and crash, not a pleasant experience. A good wide deck that is long enough to have your body close to half way back, in order to accommodate the desk, and a treadmill that can take hours of use every day at a low speed, is going to cost a pretty penny. At the same time, if you buy one that is not robust enough to handle the stress, it will burn out far sooner than desired and the expense of purchasing a new one is often cost prohibitive. There are some brands that have both treadmill and desk combined, with a treadmill that is built specifically for the long hours of use at a slow speed, and these, while expensive, are often the best solution.

Limitation number three, at least for me, is height. At 5’2” I am a bit vertically challenged, and my treadmill desk does not go low enough for me to work at a good ergonomic height. As such, I had to purchase a laptop that had a wide and comfortable keyboard that included the integrated touchpad in the center of the computer so I didn’t end up with carpel tunnel from repetitive motions, i.e., no mouse. That and sometimes my shoulders are touching my ears, not a good thing for ergonomic design. The large laptop and a smaller monitor next to it work well though, without me having to look down.

The final, but most limiting of limitations for me was repetitive use and the development of tendinitis in one of my feet. Because I have a tendency to overdo things, I thought that if walking four hours a day felt so good, walking six hours a day would feel even better. At first it did. I lost weight, I felt great, my energy was superb, but within a year of having upped my walking to six, and sometimes seven hours a day, I developed a roaring case of tendinitis that sidelined me from walking for months. Now over a year after taking a couple months off, I cannot walk the way I used to without aggravating my tendinitis, and am happy walking only two or three hours a day, and nowhere near the speed I used to walk. Unfortunately the weight has come back, and with it, the feeling of sluggishness. That said, when I walk, I feel great, and my mind is clearer and I am able to concentrate better.

The limitations that I described above are all just cautionary for those who are thinking of a treadmill desk setup. Four years into using one, I cannot imagine returning to sitting for more than a couple of hours at a time, and hope to be able to use one of these desks until I decide to turn in the keyboard. Limitations that arise are nothing compared to the benefits that are gained in my opinion.

The treadmill desk is a magic pill to a stationary office worker, as long as moderation is used and forethought is exercised in setting up your workstation. Remember a good solid treadmill with a wide and long deck is key, and no orthopedic belts because they will burn out the motor faster. Think how you will use the desk, and make sure you have a place to sit in between periods on the treadmill because most of us cannot spend a full working day walking, without consequences.

Originally published with AppraiserNews in 2015