???? PE, you are just playing devil's advocate, correct?
If you value the land "as if" vacant when it is not, the appraiser would have to utilize an HC, that is true.
But if you value the land "as is", why could you not consider vacant land sales in the analysis and make adjustments for differences in physical condition of the land? The subject is encumbered by improvements which adversely affect the utility of the land, although they may continue to add to overall value.
If you were appraising vacant land with a ROW easement along one boundary and all your other vacant land sales did not have a similar ROW easement, would valuing the subject require the use of an HC?
Kind of samee-samee...no?
Ken ... the question posted in the original post was "Can you appraise land "as if vacant" when improvements exist?"
I am not playing devils advocate here. The mere question shows that the appraisal is of something different than that which exists as of the date of appraisal. The land is not vacant. The land is improved and the value sought is for the land "as if" it were vacant ... in my mind that remains hypothetical in that it is something contrary to that which exists as of the date of appraisal.
As Mr. Wiley points out I do have an issue with the answer to the question because it does in fact not really answer the question in a manner that appraisers can apply methodology to in order to come up with a meaningful conclusion. IF an appraiser were to use vacant land sales to arrive at a value conclusion for the subject "as if" it were vacant then are we not in a position where the appraisal itself is hypothetical?
With regard to Mr Wileys comments, I would tend to agree that all appraisals have some issues of being hypothetical with respect to land because on improved properties vacant land does not exist even though we calculate land value as though the site were vacant. Yes I believe in those instances we have determined the value of a component of the property based on the hypothetical condition that X is the value of the underlying land were it vacant and available for development. This is certainly not something we wish to discuss openly very often, but the fact of the matter is that I do believe when determining value of underlying subject land (which is improved whether it be residential or commercial improvements) that portion of the appraisal is done under the hypothetical condition the site were vacant as of the date of appraisal. Im relatively sure thats why we say within our reports this is the value of the site as if it were vacant.
Your post Ken says that the improvements adversely affect the utility of the land. That is an interesting comment because we do not know that to be true. If the land is developed to its highest and best use, the improvements in fact enhance the property utility and place the land in a position of achieving its maximum return. Isnt that what highest and best use of land is? That use which provides the maximum return to the land which is legally permissible, physically possible, and financially feasible? I have not read that is an issue in this post, merely that the client wants the property "appraised as though vacant".
Selection of comparables, in my opinion, leads to the determination as to whether a hypothetical condition exists or not. If you use vacant land properties which have sold, that are available for development, in order to determine value of the subject "as if vacant" then I do in fact think you have a value conclusion subject to the hypothetical condition that the subject were vacant.
I dont see any other way around it given use of vacant sales to supply a value for an improved property.
