Obtaining a market value for a feature unlike any other

[Otis Key]

Around here, a 10 to 15% adjustment for a golf course view vs. a non-view property sounds reasonable, in my opinion.

A 13% adjustment for a golf course view vs. a golf course plus lake view sounds excessive.

If you're basing this adjustment only on the sales of one pair of homes, be prepared to be questioned if a lender is involved.

As I'm sure you are aware and meant, it is mark driven - so you have to look to the market - I've seen it go the other way also. Go back in history OP. Look at what happened there. Study the market - you might even find a positive or negative adjustment -- Look at the tornadoes happening now. Just an idea.

Per the definition of market value - "informed buyers" might be considering such factors.

 

[PropertyEconomics]

As I'm sure you are aware and meant, it is mark driven - so you have to look to the market - I've seen it go the other way also. Go back in history OP. Look at what happened there. Study the market - you might even find a positive or negative adjustment -- Look at the tornadoes happening now. Just an idea.

Per the definition of market value - "informed buyers" might be considering such factors.

OTIS .. what the heck do tornados have to do with a golf course pond? :Eyecrazy:
Buddy .. you gotta stop a little earlier in the day ... .

 

[Otis Key]

OTIS .. what the heck do tornados have to do with a golf course pond? :Eyecrazy:
Buddy .. you gotta stop a little earlier in the day ... .

You eat the maters and go to the hospital - I'll take care of the antibiotics and (BTW) it's after 10 - do you know where your parents are?

 

[PropertyEconomics]

You eat the maters and go to the hospital - I'll take care of the antibiotics and (BTW) it's after 10 - do you know where your parents are?

Yup .. definately too much

 

[Otis Key]

Yup .. definately too much

Ya want to go to the kitchen for a refill for me?

 

[John Hassler]

I think I found a solution - tell me if you think this sounds reasonable - I found a property on the same island which backed to a lake on a golf course.

Property which backed to lake and golf course (call it Property A)
- sold 07/16/2007 for $565,000 with $5,000 in concessions (effective sale price $560,000)
- 1,616 SF, 4 bedroom, 2.5 bath, built in 1994
- Effective Price Per SF = $346.53/SF
Property which backed to golf course but not to the lake (call it Property B)
- sold 08/15/2007 for $545,000 with no concessions
- 1,813 SF, 4 bedroom, 2.5 bath, built in 1994
- Effective Price Per SF = $300.61/SF
I then applied the Price Per SF of Property B to Property A to determine how much Property A would effectively have sold for had it not backed to the lake.
1,616 SF X $300.61 = $486,000 (rounded to nearest thousand)
Application of this theory - The difference between when Property A would have sold for if it did not back to the lake and the amount that it did sell for because it backed to the lake would represent the value of backing to the lake.
$560,000 - $486,000 = $74,000 or approximately 13% of its sale price was attributed to the lake feature.

While you are making a good attempt at a solution it is mathmatically incorrect. Use your $/sf GLA adjustment x 197sf (1,813sf - 1,616sf) + $15,000 ($560k - $545k). If your GLA adjustment is $75/sf your matched pair would indicate lake frontage carries a $30k premium over golfcourse frontage for this size/quality of home.

 

[Homestead]

John

I am not following your line of thought - can you walk through it with me a little more please.

 

[J Grant]

How much of a good lake view is it? Is it very diffrent from just a regular golf view, sometimes golf views with a little water make no difference visually at all, in which case I make no adjustment. Please don't listen to a realtor telling you it is worth a lot more, realtors are morons, re the whole market collapse due to them screaming that everything is worth more...but what kind of water feature is it? a small flat pond in the golf course ( I usually make no adjustment for that) or a real large body of water that is very different from regular golf views?

When they originally bought the house, did they pay more for it than others paid when they first bought their homes? Of course builder premiums for lots are very different from the market extracted premiums we use, but it might be interesting to run a check on what your home sold for originally vs your comparables.

 

[Michigander]

The way I have handled this in the past (with no recent market data to support) was to go back in time and find all the sales I could backing to the particular water feature I was looking at and then compare those to properties that didn't to see the percentage range difference. Over time it was remarkably consistent between 15% and 20% for this particular small lake (25 houses that backed to it). From there I applied it forward to the comparables and simply stuck my analysis into the body of the report. And on this one, I went back 10 years but the difference remained pretty consistent. Consistent enough to "support" my analysis. Remember, it is "support" we are looking for, not irrefutable "truth"

 

[J Grant]

I like Serena's method above and that is what I often do. But if you are comparing all homes with good golf views and the subject's is just a bit better, it might be impossbile to find...in which case I just don't adjust. Every little feature of difference does not deserve an adjustment unless it has a measureable or substantial impact on value.