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Vacant Land

Discussion in 'Urgent - Help Needed' started by Donny Lindner, Feb 22, 2006.

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  1. Donny Lindner

    Donny Lindner Junior Member

    0
    Aug 3, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    I am a little confused about the highest and best use of the 2.00 acre tract of land I am appraising. If the land is currently vacant and available for development, then is the HBU for single family? Zoning allows for single family. The land appraisal form ask if the HBU is the present use. Wouldn't the HBU of most vacant land be to develop.

    If the HBU is to develop, then would I make other on the form and explain.

    Please shed some light on this situation.
     
  2. George Hatch

    George Hatch Elite Member

    126
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    The purpose of HBU analysis is to develop an opinion on how the property would most likely be valued in the market. If the HBU for your 2 acre parcel is limited to development as (1) SFR then you would value the parcel as an SFR lot, comparing it to other SFR lots and making adjustments for those differences as they relate to the development of SFRs.

    On the other hand, the HBU is for multiple SFRs pursuant to a lot split or a condo map or subdivision then you're no longer looking as a single SFR site. At that point the typical buyer is no longer an owner-bulder, but is probably a developer; their steps to develop go far beyond pulling permits for the one SFR. The methodologies used to value these properties get more complicated depending on the answer to your HBU analysis.

    To answer your other question, if your assignment is to provide the "as Is" value of a vacant site then you are appraising a vacant site regardless of what the potential is. It's not an SFR appraisal until there's an SFR.
     
  3. xm39hnu

    xm39hnu Senior Member

    0
    Jul 10, 2003
    Professional Status:
    General Public
    State:
    Florida
    ...and to add to what George said, the HBU is "to improve" if and only if market analysis shows a demand for lots of this size in this particular area. F'rinstance, if it's located next door to a sewage plant, and the market is slow and steady, your HBU conclusion might be "to leave vacant due to lack of demand demonstrated in the market."

    Then, your comps are going to be lots with a similar HBU.

    BTW, get out the tax map, shade in your subject tract with a highlighter, and go make double sure you're appraising the right lot.

    If the HBU conclusion is "to improve," then you need to expand on that to show the typical improvement and the ideal improvement, as well as why those are typical and ideal, respectively. The HBU would NOT be "present use."
     
    Last edited: Feb 22, 2006
  4. Donny Lindner

    Donny Lindner Junior Member

    0
    Aug 3, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    Come to find out, the cost to get the utilities is equal to the value of the lot. Therefore, is the HBU to leave vacant until such time that the demand increases the value of the land? One of the comps would not be developed as utilities are not available. Other comps either have utilities or have them available. They are SF lots.

    What to do? Can you have comps with different HBU. The market area is small. I am lucky to find three comps.
     
  5. Mountain Man

    Mountain Man Elite Member

    26
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Georgia
    If the sales you analyzed are of a different Highest and Best use, then they are not comparable are they? Different uses, different purchasers/investors, different values. Land can be of the most difficult assignments, which is why we charge more for land.
     
  6. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    316
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    The highest and best use issue also involves the interim utility. The interim utility is to hold the investment. The As is HBU is vacant lot waiting to "ripen" into a SFR lot, or 2,maybe. The as is and as if vacant HBU is the same since it is vacant. If a house were proposed, then the "probable future use" is SFR.
     
  7. George W Dodd

    George W Dodd Senior Member

    0
    Jul 9, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Virginia
    Well and septic?

    Just a question, but what about the use of well and septic for the property? A 2 acre parcel might provide a perk site. I'd talk with some fokes in the trade and see what the soils are like.
    The need for a well and septic systems could be made a condition of the appraisal.
     
  8. Donny Lindner

    Donny Lindner Junior Member

    0
    Aug 3, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    I did make the comment that it appears that the site is available for development.
     
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