Acreage Value

[Ken B]

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?

In the event this question was not rhetorical, see post #35. Meta already provides a good explanation of the concept of contributory value.

 

[Mercury]

Calvin,
I don't know about where in Ohio you are, but going back more than 3 years can give you data that is worthless. The example of my acre of land that was bought 10 years ago for $76,000 is now worth close to $350,000. The value of this property being in a resort town didn't take off until a year after 9/11 when everyoneIf I go back 10 years (when it was bought) for data is that what I'm going to use. Don't think so.
If you owned 35 acres in Mason, Ohio 10 years ago what was that property worth compared to now. Old data sometimes is just that. Old.

 

[Ken B]

Calvin,
I don't know about where in Ohio you are, but going back more than 3 years can give you data that is worthless. The example of my acre of land that was bought 10 years ago for $76,000 is now worth close to $350,000. The value of this property being in a resort town didn't take off until a year after 9/11 when everyoneIf I go back 10 years (when it was bought) for data is that what I'm going to use. Don't think so.
If you owned 35 acres in Mason, Ohio 10 years ago what was that property worth compared to now. Old data sometimes is just that. Old.

Under an assumption that the annual rate of change has been constant in the past 10 years, annual market change for your property has been 16.5%. Given adequate market evidence of market change, why could you not go back 100 years, if necessary? You say you know when the market change occurred...use that information.

Your other option is the PFA approach. You may have noticed that approach is not highly favored by some.

 

[The Warrior Monk]

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?

There is no "first five acres of the 35 acres." The property is a 35-acre parcel, not a 5 acres parcel with 30 extra acres.

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.

I have no idea of your market area or what data sources are available, nor how you came to the conclusion that no sales exist. I'll just recommend not limiting oneself to any artificial distances, and use a deed transfer recording service (not all sales are included in MLS).

 

[Mercury]

Ken,
I appreciate your thoroughness and knowledge. It all comes down to data. If your sale is 10 years ago and you have no sale since, what determines the value today. There is no appreciative value percentage to go by. Data is great which I have in the case of my mountain acreage, but in this case there is no data of similar sized lots.
Hence, I can't really say that the original appraiser was wrong, I can only assume from what I learned about a new offering of similar land that has yet to hit the market. The realtor was a great source, which is nearly never true, but until that parcel sells, I've got nothing in my hand except generalities.
Notice, I did say it appears to be understated. I nor he can support that and therefore we can only give an opinion. Am I right or am I missing something.

 

[Calvin the Airedale]

Calvin,
I don't know about where in Ohio you are, but going back more than 3 years can give you data that is worthless. The example of my acre of land that was bought 10 years ago for $76,000 is now worth close to $350,000. The value of this property being in a resort town didn't take off until a year after 9/11 when everyoneIf I go back 10 years (when it was bought) for data is that what I'm going to use. Don't think so.
If you owned 35 acres in Mason, Ohio 10 years ago what was that property worth compared to now. Old data sometimes is just that. Old.

10 year old data is still data! In the context in which it took place it can still tell you something. If for instance, 10 years ago, 35 acre parcels were selling for half the per acre price of 5 acre parcels, might that not suggest some relationship in the present market? And if over time you observed that relationship a number of times, might it not be a valid indicator today, given you have plenty of 5 acre sales?

But you don't know if you don't look. Worse, if you start with the premise that beyond 3 years it has nothing to tell you, you have introduced a bias into your analysis that may keep you from discovering the truth.

 

[Mercury]

Oh and if you are not familiar with Colorado, neighborhing communities 15 or 20 miles away are either in the mountains or farmland. Neither are good sources for comparisons.

 

[Michigan CG]

........ 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?

The key to your above sentence is that it is not divisible, and therefore it is worth $5,143/Acre. Where some get confused is when they have sales of 5-acre lots for $35,000 and then try to compare them to much larger sites. They have different land sizes but they might or might not have similar utility.

The reason I asked very early in this thread about contiguous properties and potential uses for the surplus/excess land is that those things affect value.

In my area 36 acres of tillable land contiguous to other tillable land will have more value than 36 acres of tillable land not contiguous/proximate to tillable land and 36 acres of wooded area would have even less value. That is why Highest and Best Use must be considered for every property, residential or not.

 

[Mercury]

Calvin,
You keep suggesting that I'm too lazy to do the research. Ten years ago 5 acre lots were turned into subdivisions and were being sold for $200,000 and million dollar homes were built. After the downturn in building, those lots are going for less today. There is no correlation. In Ohio you can use old data because 35 acre properties don't change much there. Come live in my world.

 

[Calvin the Airedale]

Calvin,
You keep suggesting that I'm too lazy to do the research. Ten years ago 5 acre lots were turned into subdivisions and were being sold for $200,000 and million dollar homes were built. After the downturn in building, those lots are going for less today. There is no correlation. In Ohio you can use old data because 35 acre properties don't change much there. Come live in my world.

Pardon me Mercury,

I'm not suggesting you're lazy. You didn't do the research because you have a preconceived notion (it appears from your posts) that beyond 3 years it will have nothing to add. What I am saying is, "take the blinders off".

It is often the case among those raised on a steady diet of URAR work to have the artificial GSE comp proximity, adjustment and UW restrictions color all their analyses.

Sure current sales are great. We all want those, but if they don't exist, it doesn't mean historical data beyond the GSE cattle-fence boundaries are worthless.