Acreage Value

[Ken B]

Nevermind whether "$1,500/acre sounds excessive" for land in a different state. Excess or surplus.

That kind of sounds like a number was expressed and an opinion rendered, doesn't it? Now what do we call that?

 

[Stone]

The state of Washington must be so proud.

 

[Michigan CG]

If a residential appraisal has been ordered do you consider it's commercial value? Get real

OK......I don't want to get Appraisal 101 with you, but here it goes.

One of the parts of the appraisal process is to determine the Highest and Best Use of the property.

The subject is 40 acres. What is Legally permissable for the property? Can it be divided? What is financially feasible for the land? What is physically possible for the property? And finally, what produces the maximum productivity?

I happen to appraise rural properties quite frequently, AND many of them are a house and 20 or 40 or 80 acres. FWIW I am from Iowa....we had a few farms there.

If a home with 40 acres has tillable acres (that are productive) then you most likely have a a Highest and Best Use of agricultural assuming it has decent access. If only 20 acres are tillable then my question of what is contiguous is very important. If the land contiguous to the subject property is being farmed then you can most likely rent the land to Mr. Farmer next door. Then you must figure out the land rent and the value of that rent. If you can get $100/acre in rent and you can establish a 4% cap rate then the tillable acreage has a value of $2,500/acre. The other 20 acres will most likely have a lower value and different comparables should be used.

Now if the 20 acres is not contiguous or proximate to another agricultural property the Highest and Best Use is most likely not for agricultural production because Mr. Farmer is not going to drive his $350,000 John Deere five miles to only farm 20 acres.

HOWEVER....in rural Illinois and Iowa there is a bunch of "useless" land that is wooded, maybe a little swampy and to most is considered worthless. A recent trend of the rich Chicago folks is to buy this land for their yearly hunting trips and I have seen "worthless" land sell for $5,000/acre when 15 years ago you couldn't get $500/acre for it.

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When I get any residential assignment I always consider what the HIGHEST AND BEST USE is........sometimes it takes two seconds, other times it takes a little homework. If a house is sitting next to a Wal Mart on five acres the house is a bulldozer problem, I don't care how nice it is.

That is real.

 

[fifteen]

And if it's more than 1 lot, I would guess the appraiser checked with the bank to see if all lots were to be encumbered in the "residential" valuation and loan. Something that needs to be checked if the original appraiser didn't. It appears the CG's around here don't have much to do as they follow me and my comments around to dismiss them with general CG idioms that don't mean squat to residential appraisers. Too busy for their sometimes senseless chatter. Doing a RELO and not asking for help lol

OP author got the best advice from res appraisers. Let us know how it turned out ....

 

[Mr Rex]

And now Highest and Best Use is a CG only concept.What year model USPAP was that copy that burned?:Eyecrazy:

 

[Richard Carlsen]

Sounds like you do not have the necessary experience to complete this assignment.

As a hint, check the historical difference between 5 acre parcels and 40 acre parcels for a possible unit adjustment. In addition, if there are no sales in the immediate area, go to the nearest similar area where there are 40 acre sales (25-60 acre parcels) and use those.

When I have done large parcels, rather than use the gross sales price in the grid, I found it more convenient to use the price per acre. That way the value of an acre for a 25 acre parcel which we will assume to have the same unit value (per acre) as an acre in a 40 acre parcel can be compared without any size adjustment since you are comparing 1 acre to 1 acre. When you have the Indicated Sales Price of one acre completed in the grid, you simply multiply that times the number of acres in the subject for your estimate of value.

 

[Michigan CG]

..........You want to tell us more things that don't relate to residential appraising? We're all ears - NOT!!...............

The problem is that this is pertinent to residential appraising. Not everything is cookie cutter subdivisions. If a residential appraiser is going to be valuing these types of properties then they need to know how to do it properly.

.......It appears the CG's around here don't have much to do as they follow me and my comments around to dismiss them with general CG idioms that don't mean squat to residential appraisers..........

I do not "follow you around". In commercial appraising there is a lot of research time and computer time. I noticed the thread, something I appraise quite often and then I noticed your post #5 which was bad advice as were posts 9, 10 and 11. If you wish to debate with me the proper valuation techniques of rural properties with acreages I will do so until I find it counter productive.

When I see someone come on here and ask for advice and then get bad advice I feel compelled to offer my opinion (which is not always right). In this case I know my opinion is correct, and your advice was misguided.

 

[Stone]

And now Highest and Best Use is a CG only concept.What year model USPAP was that copy that burned?:Eyecrazy:

It is in appraizul land.

However, in the appraisal world, there isn't a separate residential USPAP that allows appraisers to just ignore HBU completely. As such, I hope the OP will take the advice of Timothy Evans. You know, someone who appraises rural lands and residential properties. He might actually know a thing or two about appraising a rural property.

Something about "removing all doubt" comes to mind.

 

[Michigan CG]

.............OP author got the best advice from res appraisers. Let us know how it turned out ....

Care to opine on which posts those were that explained the OP's question the best?

 

[fifteen]

The problem is that this is pertinent to residential appraising. Not everything is cookie cutter subdivisions. If a residential appraiser is going to be valuing these types of properties then they need to know how to do it properly.



I do not "follow you around". In commercial appraising there is a lot of research time and computer time. I noticed the thread, something I appraise quite often and then I noticed your post #5 which was bad advice as were posts 9, 10 and 11. If you wish to debate with me the proper valuation techniques of rural properties with acreages I will do so until I find it counter productive.

When I see someone come on here and ask for advice and then get bad advice I feel compelled to offer my opinion (which is not always right). In this case I know my opinion is correct, and your advice was misguided.

I'd say your advice is misguiding Tim. This is a residential appraisal. Since when does a res appraiser consider subdevelopment value or tree farm value or corn farm land value? We don't. Your advice does not pertain to the OP's question except in a commercial sense. I guess when they say CG's are the worst residential appraisers they weren't kidding lol. You've lost touch of what residential appraisal is and you confuse the commercial aspect into your assessment.

You CG's really shouldn't be giving advice to res appraisers imo. You complicate things more than they need to be and dismiss welcome guidance as incomplete and berate the poster. Your opinion isn't needed for a residential valuation - sorry, but that's the way it is. Anybody notice the OP author hasn't posted? Because this thread has gone way off track.... Consider that. I'm out of here, pictures need to be taken.