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Another Cost Approach Question

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ZZGAMAZZ

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Senior Member
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Jul 23, 2007
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Certified Residential Appraiser
State
California
I was trained to develop the Cost Approach in each 1004 residential appraisal report that I conduct; and I still do so even if it's not required by FNMAE.

I conduct a sales comparison of vacant land in order to determine the opinion of site value, if the subject is located in an area where pertinent vacant land sales are available.

My question: How does one address the concept of excess vs surplus land in the CA? (I don't wish unnecessarily to create an albatross of a report that makes life difficult for myself and my clients but don't know what is and what isn't appropriate/necessary.)
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I was trained to develop the Cost Approach in each 1004 residential appraisal report that I conduct; and I still do so even if it's not required by FNMAE.

I conduct a sales comparison of vacant land in order to determine the opinion of site value, if the subject is located in an area where pertinent vacant land sales are available.

My question: How does one address the concept of excess vs surplus land in the CA? (I don't wish unnecessarily to create an albatross of a report that makes life difficult for myself and my clients but don't know what is and what isn't appropriate/necessary.)

ZZ-

I'm not sure I understand the question?
The simple answer is to match like-for-like, but I suspect that doesn't answer your inquiry; can you give an example?
 

Fred

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Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
How does one address the concept of excess vs surplus land in the CA?
Question is sort of vague. If somewhere within "excess" or "surplus" you have separately platted parcels that can be sold off by themselves, I'd say you probably ought to leave them out of the appraisal - unless you are doing a portfolio appraisal. If nothing can be subdivided off and your subject is the same as the comps, I am not sure you'd have to say anything. Are you referring to where your subject has the excess or surplus and your comps don't?
 

ZZGAMAZZ

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Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
In retrospect it was indeed an ill-conceived question. The more I think about the more I realize that as long as the comparable vacant land sales are apples-apples (surplus) or oranges-oranges (excess) between subject and comparables, the sales comparison method of determining the site value would be appropriate. sorry to waste your time...
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Question is sort of vague. If somewhere within "excess" or "surplus" you have separately platted parcels that can be sold off by themselves, I'd say you probably ought to leave them out of the appraisal - unless you are doing a portfolio appraisal. If nothing can be subdivided off and your subject is the same as the comps, I am not sure you'd have to say anything. Are you referring to where your subject has the excess or surplus and your comps don't?

What about if you have a residence on a double size lot in a neighborhood of single size lots and there is a market for single lots from builders who want to build spec houses? How would the appraiser "leave out" the excess land. What about a residence on a double lot in a neighborhood of single lots with good demand for buildable single lots but the residence is built in surch a way as to encumber the entire lot (built on the imaginary or real dividing line)? Would you not say anything about the surplus land?

What about a shopping center on 10 acres that has changed it's parking configuration only needing 3 acres of parking instead of 5 acres and now has some excess land along a new street which can be sold off for some suscipient stores. Should we not mention this. Or just leave it out? I'm not sure.:laugh:
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I was trained to develop the Cost Approach in each 1004 residential appraisal report that I conduct; and I still do so even if it's not required by FNMAE.

I conduct a sales comparison of vacant land in order to determine the opinion of site value, if the subject is located in an area where pertinent vacant land sales are available.

My question: How does one address the concept of excess vs surplus land in the CA? (I don't wish unnecessarily to create an albatross of a report that makes life difficult for myself and my clients but don't know what is and what isn't appropriate/necessary.)

How does one "address" site value in the Cost Approach?

Well, site value is whatever it is.

I think that you must be asking something more than what I've given an (obvious) answer to, but I admit that I'm missing it. Help me.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
What about a shopping center on 10 acres that has changed it's parking configuration only needing 3 acres of parking instead of 5 acres and now has some excess land along a new street which can be sold off for some suscipient stores. Should we not mention this. Or just leave it out? I'm not sure.:laugh:

Your shopping center only needs 3-acres of parking now because part of your primary market has been intercepted by a new competitor.
In fact, I think you should bulldoze and build and build an office building.
 
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ZZGAMAZZ

Thread Starter
Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Lee: I'm referring to the sales comparison analysis of vacant parcels in the CA section of the 1004 form for a SFR appraisal. The absence of pertinent vacant land would result in application of the abstraction/extraction method to determine site value; but vacant land sales should be analyzed if the data exists.
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
What about if you have a residence on a double size lot in a neighborhood of single size lots and there is a market for single lots from builders who want to build spec houses? How would the appraiser "leave out" the excess land. What about a residence on a double lot in a neighborhood of single lots with good demand for buildable single lots but the residence is built in surch a way as to encumber the entire lot (built on the imaginary or real dividing line)? Would you not say anything about the surplus land?

What about a shopping center on 10 acres that has changed it's parking configuration only needing 3 acres of parking instead of 5 acres and now has some excess land along a new street which can be sold off for some suscipient stores. Should we not mention this. Or just leave it out? I'm not sure.:laugh:
What is this, the obtuse question thred? Leave out? Is that leave out of a report or out of an appraisal.

I am not sure how your residential example, fits what you linked it to in my post. That is, the "excess" parcel is platted and can be sold off. Double size lot: house on lot A and lot B is vacant, patted and can be sold off. What is the value of lot A is a quetion that does not in and of itself require any consideration of lot B. Or is this a portfolio appraisal?
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Does excess land have to be "platted" separately in order to be considered excess? What about a 100 x 100 lot in a sea of 50 x 100 lots? Residential HBU is at 5,000 sf. Cost of subdividing the additional 5,000 sf not needed to serve or support the primary HBU and market demand result in favorable conditions for subdividing. It is currently one platted lot described in a single deed.

What do you mean by "leaving it out of the appraisal?"

My question was rather vague because your answer was rather vague.
 
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