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Adjusting for differing plot sizes

How do you typically adjust for significantly different plot sizes?

  • Per sf basis of the entire plot

    Votes: 12 50.0%
  • Per sf basis of the plot less the improvement footprint

    Votes: 0 0.0%
  • Based upon the difference in land to building ratio

    Votes: 11 45.8%
  • I don't adjust for differences in plot size

    Votes: 1 4.2%

  • Total voters
    24
  • Poll closed .
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KenRossman

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Senior Member
Joined
Oct 20, 2004
Professional Status
Certified General Appraiser
State
Florida
When appraising small commercial or industrial properties, how do you adjust for significant differences in plot size (DSCA)?
 

KenRossman

Thread Starter
Senior Member
Joined
Oct 20, 2004
Professional Status
Certified General Appraiser
State
Florida
a few clarifications.

Plot size aka lot size aka site or land area/size etc...

DSCA = direct sales comparison approach
 

KenRossman

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Joined
Oct 20, 2004
Professional Status
Certified General Appraiser
State
Florida
73 views and only 11 voted - pathetic...

For those who voted [ Per sf basis of the entire plot ] how do you approach the adjustment when there are very few similar sales and most of the sales have very different gba and land to building ratios?

I come across this scenario quite often on Long Island (NY) in small typically owner occupied commercial or industrial properties.

I recently appraised a small freestanding retail store approx 2750 sf gba on an approx 24,000 sf site - L to B ratio of over 8.5 to 1. I had to go over 20 miles away (in a densely populated area) to find a sale with a similar L to B ratio. Most nearby sales had L to B ratios of 1.5 to 3.5.

Adjusting on the total lot size makes no sense to me, because of the widely differing gbas.

Most of these properties are owner occupied and most sales of similar investor owned properties (besides ground leased properties) are purchased by owner occupants, rendering the income approach questionable.

Just curious how others treat this type of scenario.
 

Artyman1200

Sophomore Member
Joined
Jun 21, 2004
Professional Status
Certified General Appraiser
State
Tennessee
I don't really get your poll. If a property has excess land, then I would value the excess land and apply the appropriate land to building ratio to the improvements based on comparable properties. It looks like that would be 1.5 to 3.5. If it's surplus land then it may or may not have any extra contributing value. I wouldn't search for comps with a similar land to building ratio if it's excess land.
 

Lawrence R.

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Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
I am one of the 73 views. I am not answering because I am here to learn. I stopped posting anything in the CG section as I am not suited to breathe the rarified air here. I am sure I am not alone. Many of the 73 are waiting for the answer, just like you.
 

KenRossman

Thread Starter
Senior Member
Joined
Oct 20, 2004
Professional Status
Certified General Appraiser
State
Florida
Neither the subject nor any of the comparables have any surplus or excess land. They are all located in fully developed prime commercial areas on very busy thoroughfares.

The subject site (and the one similar comparable) are both somewhat under utilized.

This was not for collateral valuation.

Intended use was for planning/pre listing as the property is nearing the end of a long term lease.

FWIW, I find it mind-boggling that 50% of the responders would adjust on the total site size.
 

Michigan CG

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Michigan
FWIW, I find it mind-boggling that 50% of the responders would adjust on the total site size.

Why?

30,000 SF lot, 10,000 SF single story office building, L/B = 3-1.

30,000 SF lot, 10,000 SF 4-story building. L/B = 3-1.

Which building do you want? The single story building most likely suits better for retail, but the parking is limited.

The 4-story is most likely better suited to office but may have more than enough parking.

-------------------------------------------------------------------

Your subject does not have excess land (a possible salable piece)?

Do you have surplus land?
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Ken:

Respectfully, the poll is flawed.

Secondly, most commercial appraisers won't voice thier opinions here because they are afraid of getting something written in public which can chip away at their professional credential:leeann:

That said, NO one was born an appraiser, and the professional tomes don't really address this issue all that well. Frankly most of the statistical analysis for this kind of thing ALL is smoke an mirrors! (but if you pay no attention to that man behind the curtain, it sounds good).

I agree that there may be surplus land, however this goes back to H&BU, and if after analysis the market tells you that the GBA for the subject should be X and your subject has X + Y land then Y may be surplus!

If all/most of the nearby properties have similar plot sizes you go back to H&BU and see if the site is divisable. If the land is truely excess with no potential for spinning off, then you DO have a valuation problem which can only be resolved through analysis of a wider ranging market to see what excess land sells for, no?

Its like that excessively large ___waaaay biggest___ house in the neighborhood, at some point not only do you hit diminishing returns on unit/size value, you may get all hte way over into negative value for the excess building area due to cost of maintenance and taxes, and minimal return on value of the excess house area!

Land however may be different and require some creative thinking and inquiry of zoning/planning to conclsuively 'prove' what COULD be done on the site... So after starting with legallly permissible and a more through analysis and thought of what it COULD be... then I'd use a really wide market search to find the best worst comps you can find... then re-analysis.. to form an opinion of H&BU, then value based on some kind of semi-supportable logic based on findings.

OK Guru's... someone managed to type something:clapping: ... show me where I went wrong.

Let the games begin!
 

KenRossman

Thread Starter
Senior Member
Joined
Oct 20, 2004
Professional Status
Certified General Appraiser
State
Florida
The subject and comparables are all single story retail. All recent new construction in the subject and competitive areas (on similar sized sites) would be single story retail.

Office use would typically require MUCH larger sites.

There is no excess land here.

A typical buyer would willingly pay for additional parking capability or the ability to build a larger retail store(s).
 
M

matt hawk

Guest
I came, I viewed, I voted. What I typically do is a qualitative judgement. More land to building ratio makes it superior. How much is up to speculation. If I had enough data, I'd do a linear regression, but being in an area that is not densely populated, I don't have fifteen data points to plot. Most of my subjects and comps are single story, but if it wasn't, as Timothy Evans suggested, then I'd make a parking adjustment also.
 
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