Extraction Method

[George Hatch]

We've been over this. I'm REALLY, REALLY happy that you have plentiful land sales, but (a) not everyone lives in CA - in fact, a lot of folks are moving away from there - maybe because there are too many land sales; (b) not every state is a disclosure state, so sales data cannot be extracted from public records in all states. As you're want to say - 'all RE is local'. Might not hurt to heed your own advice...

Also - just because there is a land sale within a 5 mile radius, does not make it a COMPARABLE land sale... some folks are ok with producing less than credible results. I'm not.

Consider this: If you never do land valuation then perhaps you have a competency gap to fill as to exactly what makes one land sale comparable to another or what it takes to find sales data. The buyers and sellers for land aren't the same people who are buying and selling homes. And of all the adjustments there are to make, location is among the easiest to develop and support.

As for there being no land sales in whatever part of Texas you work, I'd have to see that. I've looked at a couple suburbs in TX previously in freaking ZILLOW and didn't have any problems spotting land sales. So I'm pretty sure I could find even more sales if I was local.

I can't even tell you how many times I've reviewed appraisers in this region working on client-required CAs revert to land-value-by-I-backed-into-it despite there being adequate land sales. They didn't know because they didn't look, but I looked so I already knew in advance what the relevant land sales were before I even challenged them on their use of "extraction", which as far as I could tell in their reports they weren't even actually doing that.

 

[alebrewer]

Consider this: If you never do land valuation then perhaps you have a competency gap to fill as to exactly what makes one land sale comparable to another or what it takes to find sales data.

Consider this: if you've never had to perform a land valuation where there weren't credible, comparable land sales, then perhaps you have a competency gap to fill as to how to perform extraction.

I've looked at a couple suburbs in TX previously in freaking ZILLOW

Zillow might be all the rage in CA, but I'd recommend MLS - especially in non-disclosure states like Texas. It's been my experience that MLS is MUCH more reliable than Zillow. We'd get the book thrown at us for using Zillow in Texas...

I can't even tell you how many times I've reviewed appraisers in this region working on client-required CAs revert to land-value-by-I-backed-into-it despite there being adequate land sales.

(a) you don't review appraisers - you review appraisals. That's review 101. Once you get past that hurdle, we can start discussing the review of appraisals.

 

[RCA]

And, good sir, if you don't have land sales, what would you suggest? Allocation?.....

If you really can't find any land sales anywhere in the vicinity of the subject property that in your opinion would lead to some reasonably accurate indication in value, I still wouldn't maintain there isn't some other creative way to narrow the value into some useful range. But what I am saying is that if you have a 50 year old house on a property and use standard depreciation methods to extract land value, there are many areas, such as the SF Bay Area in California, where due to the progressive evolution of regulations and other complex factors such as increased litigation, using such depreciation to arrive at some approximation to market value of the improvements is ridiculous and therefore the same for your extracted land value. However, as I said, there may be some other method, dependent on your circumstances. That is your problem.

In the end, if you can't come up with a reasonably accurate estimate of the land value, then I would suggest you consider just telling the customer that an appraisal isn't possible. Now, that's simple isn't it?

 

[RCA]

Off topic: I've just been informed by the moderator that it is OK to "hint" at politics, whatever that means. So, OK, "hinting" is OK. OK. OK.

 

[George Hatch]

Consider this: if you've never had to perform a land valuation where there weren't credible, comparable land sales, then perhaps you have a competency gap to fill as to how to perform extraction.


Zillow might be all the rage in CA, but I'd recommend MLS - especially in non-disclosure states like Texas. It's been my experience that MLS is MUCH more reliable than Zillow. We'd get the book thrown at us for using Zillow in Texas...

(a) you don't review appraisers - you review appraisals. That's review 101. Once you get past that hurdle, we can start discussing the review of appraisals.

I obviously use all the local data sources, not just MLS. The reason I cited zillow in TX was as a worst case scenario about what even an outsider can find in your back yard. If I can find it in Zillow then you have no excuse for not finding at least that much and probably a lot more by using the data a local appraiser would normally have onhand.

Actually, while I am reviewing appraisals my comment was about the conduct of appraisers, hence my reference to what they tell me they're doing when I catch them saying one thing (I did extraction) but are actually doing another (land value by backing into it) in their reports.

 

[Mike Ault]

The most popular participation sport in Texas is keeping the tax assessor in the dark. It's a nondisclosure state and frequently it's the public-facing data that is misleading. That would be the major pitfall with relying Zillow, some of it may be accurate but lots of it most certainly isn't and there's no easy way for someone outside of the transaction to determine it. Lots of "none of your business" replies typically received while researching sales data in this state.

 

[RCA]

The most popular participation sport in Texas is keeping the tax assessor in the dark. It's a nondisclosure state and frequently it's the public-facing data that is misleading. That would be the major pitfall with relying Zillow, some of it may be accurate but lots of it most certainly isn't and there's no easy way for someone outside of the transaction to determine it. Lots of "none of your business" replies typically received while researching sales data in this state.

Zillow has to continually keep up-to-date on millions of homes and tens of thousands of new transactions across the US on a daily basis. There are so many things they cannot do that real estate agents and appraisers can do. What they provide is only superficial information, at best.

 

[George Hatch]

The most popular participation sport in Texas is keeping the tax assessor in the dark. It's a nondisclosure state and frequently it's the public-facing data that is misleading. That would be the major pitfall with relying Zillow, some of it may be accurate but lots of it most certainly isn't and there's no easy way for someone outside of the transaction to determine it. Lots of "none of your business" replies typically received while researching sales data in this state.​

Of course. I've never once used Zillow to find sales data for any of my assignments nor am I suggesting anyone else do that. I merely brought it up because if I can spot several sales in Zillow from out of state then that I don't think that indicates to a "no land sales available" market area. I'm thinking that if I was working in the area and I received an assignment to appraise a land parcel that I'd be able to do it regardless of what/where it was.

I sometimes turn down assignments based on my own lack of competency, but I've never declined an assignment that I was competent to appraise based on "no sales data".

 

[alebrewer]

I obviously use all the local data sources, not just MLS. The reason I cited zillow in TX was as a worst case scenario about what even an outsider can find in your back yard. If I can find it in Zillow then you have no excuse for not finding at least that much and probably a lot more by using the data a local appraiser would normally have onhand.

Actually, while I am reviewing appraisals my comment was about the conduct of appraisers, hence my reference to what they tell me they're doing when I catch them saying one thing (I did extraction) but are actually doing another (land value by backing into it) in their reports.

You don't even know what you don't know. Tell ya what - you do what works for you out there on the coast. I'll do what works for me here in TX. And Zillow isn't it.

 

[George Hatch]

I didn't say it was. I didn't imply it was. That's something you are spinning in your attempt to defend your no-look default.

Lookit, I get it - your employers are institutionalized and they want their widgets, and that's completely fine for them - and by extension for you when you're working for them. But they don't define the entire extent of what is an appraisal or what appraisers do. If you never do land appraisals then you're in no position to say what can and can't be done in one of those assignments or even what kinds of sales are and aren't comparable. If you never work for those types of clients then you have no clue what they do and don't consider to be meaningful for such appraisal problems.

If you got an assignment to appraise a vacant lot, would you decline that assignment or would you proceed to work the problem? I'm thinking you'd proceed to work the problem and that you'd figure it out.