An appraiser unable to find comparable old single-family sales finds large old homes converted to apartments. What may this indicate to the appraiser?

• A. Single-family use may not be the highest and best use of the subject property
• B. The subject has the same value as the apartments
• C. The property should be sold as a multi-family property
• D. The subject has no value

Answer: (B)

When market data for a single-family use is hard to come by, appraisers look to the actual market outcomes for related uses. The fact that large old homes are being converted to apartments shows that buyers are valuing these properties as income-producing, multi-family housing. Those sale prices and prices per unit establish what the market is willing to pay for that type of use.

So, the subject’s value is likely to align with the value of the apartment conversions—not because it must be used as apartments, but because the market evidence supports that use and its income potential. In other words, the price signals from the apartment properties indicate the subject would be worth the same level if it’s being treated or valued as a multi-family property in today’s market.

This interpretation doesn’t force a change in use by itself or claim the subject has no value; it simply reflects that the market’s current pricing for similar income-producing properties governs the appraisal value.