Need help with extraction technique

[Ninja]

Hello

i have a quick question regarding the extraction technique, mainly involving the RCN as i am not sure if i am doing it right

i am trying to derive a time adjustment on the subject (as vacant)

i have my subject and i have 4 vacant land sales. however, i do not have any other vacant land sales to support my adjustments, hence i will need to look for teardowns or properties that are close to be demolished

so lets say in order to perform a paired sales analysis for a time adjustment, i have a found 2 improved sales that have limited value in them

lets say for comp 1

home is 1000 sqft, 6000 sqft lot, home was in a fire, so depreciation is 100%, sold for a million

and for comp 2

home is 1200 sqft, 6000 sqft lot, depreciation around 92%, sold for 1050000

my main question

Would i be using the RCN for my subject as a benchmark (ex, if my subject RCN is at $363/sqft, do i multiply the $363 to each comparable building size to extract the land value )or do i have to calculate the RCN of each comparable sale?

 

[TerryRohrer]

How old are your vacant land sales? If they are older, I would start by looking at whether or not those older vacant sales were subsequently improved and, if so, were they then sold fairly soon after. If so, divide the site values by the sale prices as improved to develop a site value percentage. Then, apply that percentage to the most recent comparable sales you are considering. I would not rely on backing into the site value by subtracting RCN from the sale price. That assumes you know the impact of all causes of depreciation when, in fact, you cannot support that claim when you don't have a supported value of the site as if vacant.

 

[Sadie]

Hello

i have a quick question regarding the extraction technique, mainly involving the RCN as i am not sure if i am doing it right

i am trying to derive a time adjustment on the subject (as vacant)

i have my subject and i have 4 vacant land sales. however, i do not have any other vacant land sales to support my adjustments, hence i will need to look for teardowns or properties that are close to be demolished

so lets say in order to perform a paired sales analysis for a time adjustment, i have a found 2 improved sales that have limited value in them

lets say for comp 1

home is 1000 sqft, 6000 sqft lot, home was in a fire, so depreciation is 100%, sold for a million

and for comp 2

home is 1200 sqft, 6000 sqft lot, depreciation around 92%, sold for 1050000

my main question

Would i be using the RCN for my subject as a benchmark (ex, if my subject RCN is at $363/sqft, do i multiply the $363 to each comparable building size to extract the land value )or do i have to calculate the RCN of each comparable sale?

Why a time adjustment on the subject if vacant? Do you mean the underlying land value? is it as of a certain date, or current? I would avoid paired sales for market conditions adjustments, insuffienct data. 2 sales do not make a market. Broaden your area search for land sales out and do an market trend analysis or some other calculation to get your MC adjustment. Try to stay in areas with similar costs to develop/build.

In the case of the fire house, then thats a land sale. If you can, look in county records for land sales because many of them sell w/o being listed. Its tedious and well worth keeping a file on what you turn up. Just looking at your data, all other things being equal land value is between $1MM and 1.05MM.