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Where do you adjust for the cost to raze.

Discussion in 'Urgent - Help Needed' started by Sean Sutton, Nov 3, 2011.

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  1. Sean Sutton

    Sean Sutton Member

    10
    Jun 19, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Missouri
    a house. I am appraising a lot with an old house on it...that is in disrepair and not able to generate any income. The lot is zoned Heavy Manufacturing and is likely going to be purchased by a neighborhing industrial facility and used for additional parking. It is a long skinny lot on an inside street with a hodge podge mix of homes, commerial improvements, etc.

    If I have determined the HBU is for commerical use, after getting the estimates to raze the house, where do I make the adjustment? (to my comps? If so, how do I break it down into an adjustment that can be applied the the comps? or do I just knock if off the end in my final reconciliation?).

    My land sales are all vacant unimproved commercial lots with the same zoning as my property in the same area.

    Also, in this scenario, do I actually state that the HBU is for parking for an adjascent property?

    Thanks for your help.
     
  2. Mountain Man

    Mountain Man Elite Member

    12
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Georgia
    I'd write a section after the market approach using Marshall & Swift data on the estimated cost to raze the improvements.... the market approach indicates a value of $XXX minus demo cost as support above by Marshall & Swift equals a total of $XXX.

    As for highest and best use, you have the 4 test: Legally Allowable, Physically Possible, Financially Feasible, and Maximally Productive. You'll analyze the subject "as if vacant" AND as improved. So it really depends on the zoning and if the subject is large enough to support a manufacturing use. This is something that is difficult to do on a form report, this ain't your subdivision residential lot, and would be best reported in a narrative format.
     
  3. David Mescon

    David Mescon Senior Member

    4
    Nov 12, 2009
    Professional Status:
    Retired Appraiser
    State:
    California
    Sean, I mean no offense, but it sounds as if this assignment is a bit beyond your level of expertise. It is almost certainly beyond your level of licensure. Perhaps you may want to consider associating with an experienced local CG for this one. Good luck!
     
  4. Sean Sutton

    Sean Sutton Member

    10
    Jun 19, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Missouri
    Not sure why you even bothered to post...i have a sup....just not sure I agree with her approach on this issue....go back to being retired please...
     
  5. Sean Sutton

    Sean Sutton Member

    10
    Jun 19, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Missouri
    HBU is done...this is one a narrative....are you saying to just deduct the cost to raze off of the market value being indicated from my non improved sales? In this case I do feel that the cost is very near the market reaction.
     
  6. Michael S

    Michael S Senior Member

    7
    Mar 18, 2009
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico
    I would treat it like defered maintenance and deduct it as a line item at the end. I imagine it's not too much, $10-20,000.

    When I have comps that were purchased for the land value and the improvments were razed, I deduct the cost of the demolition before it even goes in the grid. The grid shows the purchase price and then the adjusted purchase price for onsite/offsite work. I.e. cost of demolition if there were improvements, or the specific cost to extend utilities if the subject and other comps have utilities.
     
  7. Sean Sutton

    Sean Sutton Member

    10
    Jun 19, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Missouri
    My subject is inferior to all of my comps because it will have to endure the cost of razing the old house. I am "minusing out" the comps because they are superior....but how? I am adjsuting everything on a sales price per sf.
     
  8. David Mescon

    David Mescon Senior Member

    4
    Nov 12, 2009
    Professional Status:
    Retired Appraiser
    State:
    California
    ..........
     
  9. Sean Sutton

    Sean Sutton Member

    10
    Jun 19, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Missouri
    Your an *********....crawl back to your hole.....

    After all your gabbing...you still can't answer my question....which must mean that you don't know either. What a sore ole scab!
     
  10. David Wimpelberg

    David Wimpelberg Moderator Staff Member Moderator

    29
    Mar 30, 2005
    Professional Status:
    Certified General Appraiser
    State:
    New York
    You stated:

    Apples need to be compared to apples, not oranges. I would compare the subject property, as if vacant, to the sales. Once I determined the value of the subject lot, I would then adjust for the cost of razing the improvements.

    The cost of razing cannot be adjusted based on an adjustment per square foot of land area. This is because the adjustment is independent of the size of the lot. It doesn't matter whether the lot is 5,000 square feet or 5,000 acres in size, the cost of razing is the same.
     
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