Adjustments For Utility Of Vacant Land

[Rick Neighbors]

I've been asked to do an appraisal on some vacant land, apx 25 acres.

It is heavily wooded, rural property on an asphalt county road. Utilities are available, but not on site.

Initial research shows sales prices of similar sites are all over the board. Some are pasture land, with hay crops, some are heavily wooded, some are more rural, some have utilities on site, others don't. To muddy the waters even more, there is a lot of speculation on gas wells in this area, and some properties are being sold without mineral rights, others are being sold with the rights.

Now, back to the question, how do you figure adjustments for utility of vacant land?For instance, wooded versus pasture, or no utilities versus, available, versus on site? Strictly paired sales?

Just curious,
Rick

 

[Ted Martin]

Utility might be what you are looking at but in my market it's much more likely to be subdivision potential. The worse the land is in terms of productivity the greater it's appeal as a home site. Steep, rocky sites with lots of trees are worth more than a corn field which is producing at a high number of bushels per acre.

 

[Lee Lansford]

The answer to your last question: Yes.

 

[Rick Neighbors]

Ted,

What really brought this up was in reviewing the sales for the area, I ran across one that had "limited access". I emailed the agent, to find what they meant. Did it have a narrow easement back to the property, creating a flag lot, or did it just have very little road frontage.

That got me to thinking about the process of adjusting for utility, if I can't find good comps. Most of the land around here is sandy loam, and just rolling. So I don't have to worry about a piece of property being located on the side of a mountain.

But one of the comps stated that it was in current hay production, where as the subject is heavily wooded. So there is some income potential due to the comp having better utility......for farming. Logging is not really an option around here, so that would not really be a factor. There would have to be some clearing of the subject to allow a road and building site, etc.

Just thinking out loud. <_<

Rick

 

[Don Lott]

Paired sales, they should answer the questions you just asked.
Rick
Is the timber marketable is the pasture rentable?
Does it have mineral rights?
Who wants to buy it and why? The Ranchers or sawmill?
What’s your market say?
Here they just want to get out of town.

 

[Otis Key]

You stated you have wooded lot sales so why are you comparing them to pasture land? Start with the wooded sites and then if you need more, you can add in those other sites and use Don's recommendation. And of course, Lee's answer is the definitive! :rofl: :rofl: :rofl: :rofl:

 

[Rick Neighbors]

Otis,

None of the comps I have, so far, are "good" comps. Lots of difference in size, road frontage, utility, etc. Hence my wondering out loud.

Wooded, in these parts, means heavy underbrush and post oak trees. Lots of clearing to do anything with it.....build, graze cattle, or just walk on it.

To further explain. The owner is having me do the appraisal, for a possible bankruptcy.

He owns the land next door, west, exact same size, cleared off, small lake, utilities in place, nice "carriage" style home on it that they are living in, until they can build the main house. ( I have a posting on that house, also.)

Next property west is rural subdivision of very nice estate type homes. Probably 20 or so, each on 2-5 acre tracts.

I am appraising both properties for him.


Don,

See above. Owner wants appraisal. No marketable timber, just post oaks. Minerals are all owned. "What my market says" is what I am attempting to determine.

Most land owners around here are displaced city slickers, looking to play weekend farmers/ranchers.

I'm not picking at them, I do the same. I have apx 100 acres that I do the part time rancher thing on. I only appraise to support my Quarter Horse and Longhorn hobby's .

Thanks for the replys.

Rick

 

[Mike Boyd]

Appraising a homesite is the most difficult to do because it is sooooo personal. What are post oak trees? Are they good for firewood? Firewood is a good business here with a cord of dry oak going for around $300. 25 acres of trees can be farmed so that it becomes a renewable resource. Our oak trees are Black oak, Valley oak, Scrub oak, maybe another variety or two but never heard of Post oak.

You just have to think like the "typical" buyer for your market area. Look at what has sold in terms of topography and trees, AVAILABILITY of utilities....not necessarily on site. That can be easily adjusted for. Views, privacy and soil tests for septic systems and stability. All can be adjusted for. Well, maybe not easily for views and privacy. More psersonal.

 

[Otis Key]

You know. They keep seem to do that to us!

None of the comps I have, so far, are "good" comps. Lots of difference in size, road frontage, utility, etc. Hence my wondering out loud.

Boy, who took all the "good comps" that don't require any adjustments? :rofl: :rofl: :rofl:

 

[Terrel L. Shields]

If Keene is where I think it is( S of Ft. Worth?) you are in the middle of the hot Barnett Shale play. Your mineral rights will come into play. Leases currently in that region will run from $250-1000 bonus money right up front plus future production, if any. In the Cross Timbers region, timber land is probably not a factor.
I think you will have to seperate the sales by whether they are (mineral) leased or not or minerals sold and that means a whole lot of work. Identifying sales is extra tough there because of non-disclosure.

Regression analysis might be a good point if you can find sales enough. And timber lots with a little topography might bring the premium price for a building site over good level open pasture. But, on the other hand, agriculture often has to compete with res. & investment buyers for land.

Here in Arky land, there used to be a distinct difference in land value for ag land and woodlots, with ag land selling about double. Now the woodlots are equal to the ag land prices, access and utilities being equal. We now have speculators buying land for future developments far in excess of the foreseeable future need. You, likely, are seeing land being hoarded there for oil exploration as much as for development. You just need to accumulate as many sales as you can and list the pertinent factors....Composition (wood vs open); access/frontage; distance from pavement; and mineral rights. I suspect size will not be a factor within a reasonable range (50%-200%). I would also look at improved sales of larger tracts and try to estimate the contribution of the improvements as additional sales support.