Weight of view on appraisal value?

[dani_a]

When comparing properties in an appraisal, should a view add value? I reviewed an appraisal today on a property which has a spectacular view of San Francisco, including the city skyline and multiple bridges, from the entire first and second floors. The comps, while otherwise comparable, have no views and are adjusted on square footage alone. Am I off-base to think this should be another factor in appraising the propertie's value? Any insight here will be greatly appreciated.

 

[Terrel L. Shields]

should a view add value?

I never adjust for view. The "View" should be identical for both the bare lot and the dwelling on that lot. So, in my mind, the value lies with the LAND, not the total property. It's the same land. Therefore, its baked into the land value. That lot should be worth a ton...unlike the land under the comps without such a view.

The best lot in a town I know looks over the creek that wanders thru downtown and you have a great view from the end of the street. The house? built 130 years ago, no insulation, bad roof, etc etc. Sold for $650k- top money in the area. Other old houses like it are selling for $300k or so. The value is in the tangible land which reflects the intangible value of the "view."

 

[George Hatch]

I adjust for views when the data is pointing that way. The data isn't always conclusive.

 

[Surf Cat]

Views such as you describe command a premium. How much depends on the sales of similar homes with the same views in comparison to homes without the views.

I'm surprised that appraisal went through underwriting without comparables of similar vantage points.

So, are you doing a review? Or, have you been given this report from your client as a reference and are doing an appraisal on this property with the skyline view?

 

[J Grant]

I never adjust for view. The "View" should be identical for both the bare lot and the dwelling on that lot. So, in my mind, the value lies with the LAND, not the total property. It's the same land. Therefore, its baked into the land value. That lot should be worth a ton...unlike the land under the comps without such a view.

The best lot in a town I know looks over the creek that wanders thru downtown and you have a great view from the end of the street. The house? built 130 years ago, no insulation, bad roof, etc etc. Sold for $650k- top money in the area. Other old houses like it are selling for $300k or so. The value is in the tangible land which reflects the intangible value of the "view."

A vacant land appraisal is one type of appraisal.

An improvement and land together is another appraisal entirely - it IS a package of the house and land so it is not correct to just portion the view to the land - the adjustment on the appraisal is often on a grid with the word view for the line item adjustment because that reflects what a buyer is putting a premium on-it applies to condos as well where there is not an individual lot owned.

 

[RCA]

When comparing properties in an appraisal, should a view add value? I reviewed an appraisal today on a property which has a spectacular view of San Francisco, including the city skyline and multiple bridges, from the entire first and second floors. The comps, while otherwise comparable, have no views and are adjusted on square footage alone. Am I off-base to think this should be another factor in appraising the propertie's value? Any insight here will be greatly appreciated.

Since we have a lot of hills in the SF Bay Area, we also have quite a few homes with nice views. Understandably some don't. But, I would be cautious on views. They are overrated - and a major source for overvaluation.

Understand very rare spectacular views can indeed be worth a lot. You have to have a sense about how rare that view is. You have to be familiar with the real estate. Ask agents.

Also understand, most high income earners spend most of their real time in front of a computer, maybe all day long, and they think - yea a good view is nice - but they can get by without it and other things like the quality of the neighborhood, commute issues and so on are practically speaking more important.

I have a decent view of the ocean and I certainly appreciate it, but I don't have much time to stare out the window. I have work to do.

What am I concerned about? 1. Clean air, water, noise. 2. Functionality and House Infrastructure (I with I had a good battery system with the Solar). 3. Space - I could use more for a separate excercise room. But my wife has other views. ...... Everyone has their own tastes, and you have to have a sense of where the averages are - and the distribution.

I would venture to guess that relatively few people spend more than 5% of their waking hours looking out the window or in the backyard.

 

[Tom D]

You can always fix up the house, to the way you like it. But you can't move your neighbors, or change the view. Big city urban & suburbs. Views are important, sometimes have less neighbors because of it. I can't get a house on the river, but a roof top deck with river view would be one of my hot buttons. That being said, it's not a major adjustment.

Here with bigger lots, is that the view is better. Your neighbor isn't looking at your bedroom windows standing next door.

 

[Mark K]

I never adjust for view. The "View" should be identical for both the bare lot and the dwelling on that lot. So, in my mind, the value lies with the LAND, not the total property. It's the same land. Therefore, its baked into the land value. That lot should be worth a ton...unlike the land under the comps without such a view.

Agree to a certain extent, however, I also agree with...

A vacant land appraisal is one type of appraisal.

An improvement and land together is another appraisal entirely - it IS a package of the house and land so it is not correct to just portion the view to the land - the adjustment on the appraisal is often on a grid with the word view for the line item adjustment because that reflects what a buyer is putting a premium on-it applies to condos as well where there is not an individual lot owned.

I've never appraised a high-rise condo but I've seen the price differential between a 3rd floor condo and an exact model match on the 10th floor, or higher. No land value to consider so the differential has to be in the 'view'.

I think in the 'flatlands' most of the view value would be baked into the lot cost but in other areas, it would be a separate line item.

 

[Terrel L. Shields]

a high-rise condo

Well, in the instance of a condo, obviously some units are higher, some units face the ocean, etc. I would expect a view adjustment, however, a condo does not have a real discernable land component dedicated to the unit which is a three-dimensional reference point. X, Y, and Z (height) plus orientation.

 

[J Grant]

When vacant land or vacant sites are appraised, the land is it - everything, including view, is attributable to it. Very often, especially in built up areas, the buyer for a vacant site is not the same buyer as for a house on a site.

After the house is put on the land and they are sold together, then everything contributes to the value of the whole. A lake view, for example, might contribute 100k to a vacant site as seen in the prices. But after the house is placed on the site and they are sold together, the Lake View, per other sales and market alanlsus, the Lakeview might contribute 50k or might contribute 200k. On GSE forms, there is a separate line item and UAD field for view in the SCA.

In the cost approach, there is a line for land value estimate, and the contribution of view to the land is noted there. For res lending, GSE use it stipulates that the value be based on the SCA. I bring up GSE requirements since it is such a prominent part of the res business. However, Imo the principles would apply in any market value assignment, since it is not the form but the market that demonstrates value.