Acreage Value

[Pittsburgh Pete]

If you can't PROVE it, how do your support your statement?

I wasn't asked to prove anything. As Ken so insightfully points out, the OP referred to the acreage as "excess land"; by definition it would have to have value. Those pesky definitions.

 

[Mike Boyd]

Practically by definition, "excess" land will have some value.

I am not by a window, so I can't take a picture and prove that the sun is shining outside right now, but there is an extraordinarily great likelihood that it is.

Given the very great likelihood that the sun is shining, the requirement is upon the naysayer to prove that it is not.

So we going to go all philosophical with this discussion now?

No. Make a subjective adjustment based on your personal belief. However, if your report is for a lender, they will want proof. If you can't prove it, then give it no value. Note: the sun rises every day. You can PROVE that by ample historical data.

 

[Calvin the Airedale]

No. Make a subjective adjustment based on your personal belief. However, if your report is for a lender, they will want proof. If you can't prove it, then give it no value. Note: the sun rises every day. You can PROVE that by ample historical data.

Is your inability to prove the value of the excess due to the fact that the proof does not exist, or that you have not found it? Likely, it's because you haven't found it. Your adjustment should be based on something. Belief aside, if experience tells you that something is likely, it is a valid basis upon which to adjust in the absence of something more convincing.

Failure to adjust, based on your reasoning above, is just as arbitrary as any adjustment based on belief alone.

 

[Ken B]

The appraiser's opinion of reasonable contributory value for excess land should be supportable with market evidence. I think the crux of this discussion is that the OP, who was reviewing a report, "believed" that another appraiser's opinion of contributory value for site area which was greater than the norm for the area was excessive. Someone else, who had absolutely no knowledge of the subject property's market, "threw out" a number as their opinion of what should be reasonable.

The entire purpose for this discussion is that NO ONE here had the slightest clue what a reasonable contributory value should be for the land area in question. Given a necessary assumption that the original appraiser is more familiar with his/her market than ANYONE else who has been involved in this discussion, it would be irresponsible for anyone else to assume that the original appraiser was incorrect.

Should the original appraiser have provided SOME market evidence to justify the adjustment? Absolutely. But, if no evidence is submitted to support the adjustment, for anyone else not familiar with the subject market to dismiss the appraiser's opinion, merely because their unsupported opinion differs from that of the appraiser, is irresponsible and unprofessional.

The "prove it" argument must go both ways.

 

[Mercury]

Wow!!!!!!!!!!
I feel like I started World War III. I solved my problem in the following manner. The town the property is in is a small town about 40 miles south of Denver. I stopped in at the local real estate office and had discussions with the local realtor who has the scoop on the entire area. The realtor, odd as it was, just so happens to be listing the 32 acres of land right next to the subject for $599,000. The listing will be active tomorrow. It appears that the original appraiser was taking an extremely conservative approach to the value of the land so that he wouldn't tip the scales too greatly and have the land worth more than the improvement. I don't necessarily fault him without data to support the value of his land, but it appears the land value was given such a low value to streamline the loan by diminishing the land value.
As to other comments in this I was disappointed. I was looking for an answer or some guidance to an answer and it turned into the Jerry Springer show. My original question had nothing to do with commercial business on the property due to not being a certified general and having the knowledge, I couldn't begin to review such an assignment.
I realize my question might have been too general at the time, but without sales data, I was trying to get into the mind of the appraiser that gave the value of $1500 an acre and how or why they came to that conclusion.
Of course the value of an acre of tilled land in a 35 acre lot is equal throughout, but I have seen many examples of what Apprazur was saying. I personally bought an acre of land in the mountains for $76,000. If I wanted 5 acres, I could have bought it at $235,000 and if I wanted 20 acres, I could have bought it for $795,000. All just miles apart. Does that make my acre now worth $47,000 or $39,000?

 

[Mercury]

In addition, I think the original question asks this. Just for numbers I do the following. Assuming none are subdivsible. If 5 acres is 35k and 35 acres is 180k, are the first 5 acres of the 35 acres worth 35k?

 

[Mercury]

One last thing. I had plenty of data to tell me what 5 acres was worth, but none to show the value of 35 acres. Even going back 3 years.

 

[Calvin the Airedale]

I don't necessarily fault him without data to support the value of his land, but it appears the land value was given such a low value to streamline the loan by diminishing the land value.

Speaking of the author of the report you're reviewing, it is not his job to underwrite the loan, streamline the lending process or juggle the value allocation among land and building so as to make credit extension easier. If he has an estimate of land value, it was his job to support that estimate.

I had plenty of data to tell me what 5 acres was worth, but none to show the value of 35 acres. Even going back 3 years.

Perhaps 3 years wasn't long enough? Apparently not. It's a lousy point to get hung up on but if you've accepted the review assignment you've assumed the obligation. Do, therefore, what it takes to discover that point.

 

[Calvin the Airedale]

Of course the value of an acre of tilled land in a 35 acre lot is equal throughout, but I have seen many examples of what Apprazur was saying. I personally bought an acre of land in the mountains for $76,000. If I wanted 5 acres, I could have bought it at $235,000 and if I wanted 20 acres, I could have bought it for $795,000. All just miles apart. Does that make my acre now worth $47,000 or $39,000?

You say "of course" as if you're postulating a law of physics. Why of course? In fact, the story you go on to tell disproves this statement.

I don't think the brohaha in this thread was the result of a minor disagreement regarding the law of dimishing returns. Unless I totally misunderstood Appraisur's argument, I believe he was saying that beyond a given threshold, this law has been repealed.

As someone cleverly pointed out, this may be true for the last 50 acres on the dark side of Jupiter, but for the differences presented in the OP the argument seemed incredulous.

 

[Ken B]

I agree with Mr. Airedale. The value is the value. An appraiser who intentionally manipulates the data so that some artificial goal is reached has misrepresented the value of the property. Misrepresentation is also known as fraud. Understating value is as much a misrepresentation as overstating value. One is not "less bad" than the other.