Acreage Value

[Mercury]

I have an appraisal I am reviewing in which the subject is a 36 acre property with an improvement and all of the comps are 5 acres or less. There are no comps of equal acreage to be found. All of the information is factual. There is a line added for acreage over 5 acres and a plus adjustment is given for $1500 an acre. This is a minimum of a $45,000 plus adjustment on all comps. It appears to skew the value to a higher number. My question is as follows: Is the acreage over 5 acres considered excess and given no value? It is zoned agricultural and has no business on it.

 

[Pittsburgh Pete]

Why would the excess land have no value? It certainly contributes to value; the question is how much.

 

[Mercury]

When everything comps out around 300k and then you give a value of $340,000 based on the extra land it appears to drastically change the value. Especially when the 36 acres is open land and the 5 acres is treed property. Just not sure if the 5 acres isn't as valuable as the 36.

 

[KYLECODY]

Are you sure youre reviewing this and not trying to get a little help for yourself??

The extra land has value, sure. The $1500 per acre adjustment needs to be supported and just cant be arbitrary. Im not going to buy a house and 5 acres for $300000 if I can buy a house and 36 acres for $300000.. To support the adjustment look retroactively. See what sort of contribution the extra acres gave to prior, older sales on similar 36 acre lot sizes when compared to 5 acre sales in the same time frame.

 

[fifteen]

just find some land sales of a similar size and compare it to the subject site. you don't need improved comps with the same acreage. My experience from data says that over a certain acreage there is no added value.

 

[Mercury]

Kyle,
This is all anonymous so I have no reason to lie. The rest of your answer makes sense. I will go back 3 years and see if any other 36 acre lots sold and at what price. Thanks.

 

[Mercury]

Apprazur,
That is my belief as well. Hence the dilemna. I have some say it has value and others say it has none.

 

[mattfrentheway]

look in the FHA manual under excess land. That will tell you how to consider if something has excess land.

 

[fifteen]

$1,500/acre sounds excessive. It might be worth that much up to 20 acres but certainly worth much less at 36 acs. Say total is up to 20 @$1,500 and zero for the rest. 5 acres +$1,500/acre up to 20 and 16 at 0 would yield $725/acre +/- for the total. Sales of large acreage will tell you as compared to 5 acre sites - they don't need to be improved for a market extraction. It may end up being $200/acre, or even zero. Let the market tell you as it is unimproved excess land according to the comps used. I can't believe the appraiser didn't put support in the report for the $1,500/acre. Good luck

Apprazur,
That is my belief as well. Hence the dilemna. I have some say it has value and others say it has none.

 

[Michigan CG]

$1,500/acre sounds excessive. It might be worth that much up to 20 acres but certainly worth much less at 36 acs. ..................

This is a dangerous generality, and while it could be true, there are too many other questions to ask.

First of all is it excess land, surplus land, and what is the highest and best use?

Excess Land
In regard to an improved site, the land not needed to serve or support the existing improvement. In regard to a vacant site or a site considered as though vacant, the land not needed to accommodate the site's primary highest and best use. Such land may be separated from the larger site and have its own highest and best use, or it may allow for future expansion of the existing or anticipated improvement. See also surplus land.

Surplus Land
Land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately. Such land may or may not contribute positively to value and may or may not accommodate future expansion of an existing or anticipated improvement. See also excess land.

What can be done with the land, what is it contiguous with? What are the contiguous parcels being used for? Is the land tillable, if so, is it productive? Could it be recreation land?

There are a lot of unknowns in this thread to opine any kind of opinion.