Appraising "Golf Course" Homes

We have a high end appraisal of a home on a golf course to do. There are some things I have learned over the years that I thought I would share for those who are interested in the nuances of locational values of golf course properties.

Let me know what your experience have been, if you have seen similar things, or other things too.

Much of this I learned from one appraisal, involving golf balls. I call it my golf ball case. A buyer sued the seller, the listing and sales office three years after purchasing a $2.6m home, saying he got golf balls in his yard, even though he had a Golf Ball Easement on his deed, and this was his third home in the project.

They got a PhD, MAI, to say homes on the golf course are worth 40% less than those that are not. IMHO, the appraisal was a fraud. But, the case was built around it.  READ ON . . .

Mid morning the first day, the receptionist came in and asked what I wanted for lunch. I asked, what did she mean, and she said that the chef prepares their lunch every day, I could have whatever I wanted. So, I ordered lobster that first day, prime rib the next, fillet of sole the next, and so on.

I worked diligently for days, not too fast, so as to be careful and get all the details on the data. Besides, I was being paid by the hour. 

When I was ready to see the comparables, the broker took me out on the golf course in a cart and we toured them together, stopping at each sale and standing on their patio, looking at the course and determining the likelihood of balls given the location and obstacles and the ratio of right to left hand golfers.

At the point I had narrowed down the field of data to a dozen comps. I asked for phone numbers for the buyers and Sellers. The broker replied, "Which one, office or home", I responded, Both.

Now, understand that this was a famous case within the country club itself. So when I would call and reach the secretary and explain who and why I was calling, they would ask "which side of the case are you on" because they knew. Fortunately I was on the right side. I always try to be on the right side. The other side in this case need appraiser to commit fraud, my side only needed the truth. Often this is the situation in litigation cases. So, appraising the case is the first thing we do before accepting the assignment.

It was unbelievable, people were being called out of Board Meetings to take my calls. What great interviews I had, and what all I learned from talking to owners of  multi million dollar homes about their purchase decisions, about their understanding and knowledge of the location they purchased, whew, it was great.

 

In the end, I produced a Litigation Notebook that was about four inches thick, but no written report. Next I was deposed for two half days, about 9 hours. The attorney on the other side was slow and methodical, often repeating questions or asking the same thing in a different way. So, I mixed up my answers too, in order to make him ask more questions. It was fun, being prepared, having verified my data six was from Sunday, having interior photographs of my comps, having walked their lots, etc., etc..

All I was really doing was drawing on my acting training from high school and my first years in college; and I tried to act like a professional appraiser. I even dressed like one. My original college major was Speech-Drama, I did not change to Real Estate Finance until my senior year. Acting like a professional on this assignment earned me over $5,000 for the appraisal and $2,700 for the deposition. Not bad at a time when URAR fees were $300.

Now, I actually like acting like a professional, and I try to practice it every day, from the way I dress, to the way I carry myself in public. don't get me wrong, I do not wear suits in the field like we did when I started, but I do wear a pressed shirt and pants, color coordinated and shoes that take a polish. It may be business casual for field work, but I still think about it, have it my consciousness. We all make impressions every time we go into the field or make phone contact. Why not control how people perceive us?

Regarding our new assignment, when I looked it up on Smart Map {you can use Google Earth too, its free}, I realized the location is in the middle of the Fairway.

This is not the best place to be on a golf course. What we will do is check the locations of the comps. and make appropriate adjustments.

We will adjust downward those behind the greens, and upward those on the "T" locations, and interview agents on those along the fairways as to how many balls get into the yards from Hooks or Slices.{this is truly a level of nuance not taught in any appraisal book, course or seminar isn't it, yet it is a real part of what we experience in the field, or not}

The best location is when you are behind the green, less noise, fewer errant balls. Cuts and Slices 125-175 yards out from the "T" are not good, the "T" itself is a bad location too, too much noise. On public courses it can be unbearably noisy.

The premium location might be an elevated pad overlooking a lake with the green beyond and a westerly or sunset view with the clubhouse in the background. I call that a 100% view.

My first experience with this was on a street called Las Cascadas in the Vintage Club in Indian Wells in 1988 or so. The buyer had purchased a multi million dollar home on a large elevated lot above the lake and green, with the club house to the west and lights that shimmered at night over the lake.

He dropped the home, tore it down.It was less than 10-years old. When asked why, he said "I did not buy the house, I bought the lot and the location". 10-years later someone bought the home to the left of him, which was elevated a little higher, and tore it down too. I actually still have the plans to that one.

So, as part of our due diligence on this new assignment we will check and verify the locational nuances associated with each comp. we use, along with the transactional, and personal property items included in the prices, and the physical elements.

Author: Steven R. Smith, MSREA, MAI, SRA, Smith Realty Advisors, 936 San Jacinto St., Redlands, CA 92373 -  Real Estate Appraisals, Consulting, Expert Testimony, Forensic Reviews, Fraud Research and Analysis, Litigation Support, Fraud Training through the Association of Real Estate Professionals.  Phone 909-798-8855, Fax: 909-798-0139